Ethereum has delivered a powerful 56.5% rally over the past month, but behind the scenes, market signals suggest the fuel may be running low. Despite investor optimism and strong ETF inflows, key data from the derivatives and DeFi space is sending cautionary signals — and the long-awaited breakout above $4,000 is looking less certain.
Derivative Markets Signal Caution
ETH’s bullish momentum appears to be cooling in the futures market. The annualized funding rate for Ether perpetuals has dropped sharply — slipping from a high of 19% earlier in the week down to 9% by Thursday. Strikingly, these lower funding levels mirror those from early July, when ETH was still trading near $2,600. This suggests that traders aren’t showing the same appetite for leveraged long positions, even as prices climb.
Futures premiums are telling a similar story. For three consecutive weeks, they’ve hovered in a neutral zone, with annualized rates softening from 8% to 6%. Despite consistent ETF inflows, enthusiasm from derivatives traders seems to be on pause.
Ethereum Losing Ground in the DeFi Race
On the DeFi front, Ethereum’s dominance is also showing cracks. Its total value locked (TVL) has declined 11% over the past 30 days, falling to 23.4 million ETH — a five-month low. In contrast, Solana’s TVL dropped only 4% in its native currency, while BNB Chain actually saw a 15% increase in BNB deposits.
Ethereum's lead in DEX volume has also faded. Over the past month, Ethereum handled $81.4 billion in DEX transactions — slightly less than Solana’s $82.9 billion and far behind BNB Chain’s massive $189.2 billion. If Ethereum’s onchain activity continues to stagnate, its competitors may keep closing the gap.
Institutional Interest Slows, But Could Reignite
Institutional accumulation played a key role in ETH’s recent rally. Several publicly traded companies, including Bitmine Immersion Tech, SharpLink Gaming, and The Ether Machine, each hold more than 2,000 ETH, according to Strategicreserve.xyz. However, corporate buying has cooled off in recent days. A resurgence in institutional interest could be the push ETH needs to finally clear the $4,000 barrier — and potentially aim for $5,000.
Traders Remain Hesitant
Even with three straight weeks of ETF inflows, sentiment among Ethereum traders remains cautious. Growing competition from Solana and BNB Chain, coupled with Ethereum’s own declining onchain performance, is making a decisive breakout more difficult.
Until ETH sees renewed strength in both its derivatives market and core network activity, the $4K milestone may remain out of reach — leaving investors wondering when the next big move will come.$BTC