Ethereum (ETH) saw a surprising 30% surge between May 8 and 9, possibly marking the end of a 10-week downtrend that bottomed out at $1,385 on April 9. This sharp rally triggered the liquidation of over $400 million in short positions, catching many whales and market makers off guard.
Despite the strong rebound, sentiment in the ETH derivatives market remains cautious. The ETH futures premium has yet to cross the 5% threshold—a sign that demand for leveraged long positions is still weak. Since the start of 2025, ETH has underperformed the broader altcoin market by 17%, further dampening investor confidence.
Some analysts see this as an opportunity for continued short covering, while others argue that Ethereum’s fundamentals still lack meaningful improvement.
Ethereum Retains Its Lead in Decentralization and Security
Regardless of price action, recent network upgrades have significantly improved Ethereum’s Layer-2 scalability. More importantly, Ethereum remains the leading platform in terms of decentralization and network security.
Ethereum’s total value locked (TVL) currently stands at $64 billion—far surpassing the combined TVL of its top three competitors, Solana, BNB Chain, and Tron, which together hold $22.3 billion.
Still, demand for spot Ether ETFs remains underwhelming. According to Farside Investors, even during ETH’s biggest single-day gain in four years (May 8), U.S.-listed spot ETFs recorded $16 million in net outflows—marking the third consecutive day of withdrawals.
Another contributing factor is the steep 85% drop in Ethereum network fees from January to April, indicating lower activity. This not only reduces demand for ETH but also weakens staking yields, as Ethereum’s burn mechanism relies on transaction competition.
In the options market, ETH put and call options are currently priced at similar levels, signaling a neutral sentiment and a lack of clear direction from institutional players.
However, Ethereum may regain attention if rivals stumble. Notably, former U.S. President Donald Trump recently severed ties with a lobbying group that had pushed for a “crypto reserve” strategy, after previously endorsing Solana, Cardano, and XRP in March.
Despite subdued activity in ETFs and derivatives, a rally toward the $2,700 level remains plausible—especially if investor sentiment shifts in light of failed lobbying efforts by Ethereum’s competitors.
