Ethereum Price Slumps Amid Weak Institutional Demand and Stagnant On-Chain Activity

Ethereum (ETH) price failed to reclaim the $1,700 level over the past week, tracking broader weakness across cryptocurrency markets. Despite this correction, which contrasts sharply with the bullish momentum seen in the US stock market, traders remain concerned that Ether's appeal has faded due to sluggish on-chain activity and a lack of demand for bullish leveraged positions.

The ETH perpetual futures annualized funding rate flipped negative on June 5, meaning shorts are paying premiums to keep their positions open. This indicates that bearish traders are comfortable adding risk despite a 30% price correction over the past five weeks. The ETH futures aggregate open interest has dropped significantly, indicating a pullback in institutional activity.

Total exposure on ETH futures has fallen 30% in a month, hitting a 13-month low. This shrinking institutional appetite is evident in US-listed Ether spot exchange-traded funds, which posted $323 million in net outflows over two weeks.