Ether Struggles to Recover as Traders Remain Cautious Amid 44% Year-to-Date Loss

Ether (ETH) has seen a 6.4% increase from its March 30 low of $1,768, but it has struggled to regain the $2,000 level. Some traders attribute this downturn to the deflating memecoin market, which has reduced activity across the decentralized applications (DApps) ecosystem and the broader crypto space, despite not being exclusive to the Ethereum network.

Year-to-date, Ether is down 44%, and derivatives metrics indicate that traders are not bullish and show little confidence in a strong recovery in the near term. This is evident in the premium on Ether futures relative to spot markets, which rose to 4% on April 2 from 2% on March 31, but remains below the neutral 5% threshold. This data suggests that Ether investors are far from turning bullish, despite the strengthening support at the $1,800 price level.

To assess whether whales and market makers lack confidence in Ether’s performance, one should analyze the ETH options market. Under neutral conditions, the 25% delta skew should be balanced between call (buy) and put (sell) options, typically ranging from -6% to 6%. The Ether delta skew metric has retreated from the 9% level seen on March 31, yet the current 7% reading suggests that risk-aversion sentiment remains strong. The rising cost of hedging indicates that whales fear further downside for ETH, suggesting it may take longer for traders to regain confidence.

Ethereum adoption remains strong despite a 49% drop in Ethereum DApps revenue between January and March. While the reduced network activity limits the influx of new users and dampens overall demand for ETH, its advantages over traditional financial markets and its dominance in decentralized finance (DeFi) remain unchanged. The stablecoin holdings on Ethereum are nearing an all-time high of $124.5 billion, and Ethereum is still the undisputed leader, with $49 billion in total value locked (TVL). This data suggests significant potential for ETH adoption, particularly as new use cases emerge, such as structured products and more complex DeFi applications leveraging synthetic assets.

Despite the early struggles of metaverse applications, declining interest in memecoins, and the sharp downturn in non-fungible token (NFT) marketplace activity, the Ethereum network continues to expand. Instead of focusing solely on how professional traders are positioned, it is also valuable to assess retail investors’ sentiment. Perpetual futures (inverse swaps) typically follow spot prices closely, as leverage imbalances are corrected through a fee known as the funding rate, which is charged every eight hours. In neutral markets, this rate fluctuates between 0.1% and 0.3% over a seven-day period.

The ETH perpetual funding rate has been neutral since March 31, indicating that retail traders are not attempting to catch a falling knife. A key factor behind this lack of enthusiasm is the spot Ether exchange-traded funds (ETFs), which saw $37 million in net outflows over the past two weeks. While derivatives data is often backward-looking and does not necessarily signal further ETH price declines, sentiment could shift quickly given the positive momentum from the Trump family’s World Liberty Financial investment in ETH and Eric Trump’s vocal support for Ether. For the time being, professional traders and retail investors remain cautious about ETH’s price outlook.