ETH investor sentiment has weakened as on-chain activity slows and derivatives data turns more cautious. This shift has left major ETH holders unconvinced about the likelihood of a move toward the $4,000 level.
Despite Ether rising 15% from last week’s low of $2,623, derivatives indicators show that traders remain hesitant. The lack of bullish leverage among large ETH traders, along with falling network fees, continues to weigh on confidence. Many investors are now questioning what must change for ETH to attempt a sustained push back to $4,000.
Derivatives Data Shows Fading Bullish Appetite
The perpetual futures funding rate has shown almost no demand for leveraged long positions since Monday. Typically, this rate ranges between 6% and 12% to cover borrowing costs. Much of the current caution stems from the sharp 20% flash crash on Oct. 10, which triggered widespread liquidations across centralized and decentralized platforms.
Ethereum’s total value locked (TVL) dropped significantly after the crash, falling from $99.8 billion on Oct. 9 to $72.3 billion, according to DefiLlama. This decline suggests weaker demand for Ethereum-based applications and adds pressure to ETH’s price outlook.
Falling Network Fees Add to Concerns
Network fees on Ethereum declined 13% over the past week, even though transaction activity held relatively steady. Investors worry this divergence could lead to a negative cycle: lower network deposits, reduced fees, and ultimately less ETH being burned. Because Ethereum’s deflationary mechanism relies on strong on-chain activity, the recent drop raises concerns about a potential shift toward an inflationary trend.
Whales Reduce Long Exposure
Data from OKX shows that top traders have been scaling back their bullish ETH positions across spot, margin, and futures markets. The current long-to-short ratio reflects a 23% tilt toward bearish positioning. Whales and market makers have repeatedly failed to build meaningful long exposure, signaling a lack of conviction in near-term gains.
Weak U.S. Labor Data Weighs on Market Sentiment
Traders are also reacting to signs of a softening U.S. labor market. Rising operating costs, a decline in consumer spending following the recent government shutdown, and more than 25,000 job cuts announced in November have eroded confidence.
Analysts warn that accelerating layoffs could further dent risk appetite—including interest in Ethereum. At the same time, the U.S. government continues to expand debt to support growth, while major investments in artificial intelligence infrastructure are still years away from delivering returns.
Macro Uncertainty Limits ETH’s Upside
A weaker labor market could eventually push the Federal Reserve toward a more accommodative stance. Historically, such conditions have benefited cryptocurrencies. But for now, the uncertain employment outlook is keeping ETH traders cautious.
With limited liquidity injections from global central banks and growing attention shifting toward tech equities and bond markets, ETH faces a challenging environment. Until conditions improve, the path back to $4,000 appears uncertain.
