Investor sentiment surrounding Ether has weakened significantly, with a notable shift towards the safety of short-term US government bonds. Between Wednesday and Thursday, US-listed Ether exchange-traded funds (ETFs) recorded a stark net outflow of $242 million, reversing a prior influx of capital. This trend reflects a broader concern among traders regarding the sustainability of Ether's price, which has struggled to remain above $2,150 since early February.
The current environment, marked by high interest rates and an increasing supply of Ether, has diminished the attractiveness of the 2.9% staking yield for long-term investors. In addition, the US 2-year Treasury yield dropped to 3.42%, suggesting expectations of potential interest rate cuts by the Federal Reserve. This scenario aligns with growing fears of economic stagnation and inflationary risks.
Moreover, Ether's price has plummeted by 38% over the past month, leading to reduced network fees and lower staking incentives. Concerns about Ethereum's ability to compete with other blockchain networks have intensified, as traders exhibit bearish sentiment reflected in ETH derivatives metrics. Professional traders show hesitance in maintaining positions that expose them to further price declines, indicating a cautious outlook on Ether's future performance.