Ether Rebounds to $1,950 as Record Staking Supply Limits Sell Pressure

Ether (ETH) rallied to test the $1,950 threshold on Tuesday, marking its highest price point in nearly two months and triggering a massive wave of liquidations for bearish traders. The sudden upward movement forced the closure of $62 million in leveraged short positions, capitalizing on a broader market recovery that saw Bitcoin (BTC) climb past $66,500. This latest surge represents a 29% recovery from Ether’s local low of $1,500 recorded on June 26.

The upward momentum in the cryptocurrency market coincided with a positive shift on Wall Street. Investor sentiment was bolstered by strong corporate earnings, including a favorable quarterly report from 3M Company, which helped ease anxieties surrounding stretched stock valuations. Market participants are now closely watching tech giants, with Google’s parent company, Alphabet, scheduled to release its financial results. Analysts anticipate a 64% growth in Alphabet’s cloud services revenue, driven by heavy investments in artificial intelligence. A strong performance from the tech sector could provide the necessary tailwinds to push the total cryptocurrency market capitalization beyond the $2 trillion milestone.

However, Ethereum’s impressive price action stands in stark contrast to its underlying network metrics. Onchain data indicates a persistent stagnation in network utilization, with demand for transaction processing failing to recover to levels observed six months ago. This decline is largely attributed to a waning interest in speculative assets like memecoins and utility tokens. Several high-profile projects within the Ethereum ecosystem, including Ethena (ENA), Mantle (MNT), and Arbitrum (ARB), have suffered steep valuation losses, with their token prices dropping by 50% or more since the start of the year.

According to data compiled by DefiLlama, weekly revenue for Ethereum-based decentralized applications (DApps) plummeted to $9.8 million, marking its lowest level since September 2024. Among the few resilient protocols, Sky—formerly known as MakerDAO—generated $3.2 million in weekly revenue, while the decentralized oracle network Chainlink brought in $1.2 million. Concurrently, weekly trading volumes across decentralized exchanges (DEXs) fell to $7.2 billion, highlighting a broader slowdown in decentralized finance (DeFi) activity.

This fundamental weakness is reflected in the derivatives market, where professional traders remain highly cautious. The annualized funding rate for Ether perpetual futures has consistently struggled to maintain a position within the typical neutral threshold of 6% to 12% over the past month. While this represents an improvement from the negative funding rates seen in late June—which indicated dominant bearish sentiment—it suggests that leverage-backed buyers are still hesitant to commit to a sustained upward trend.

Despite these headwinds, structural changes in supply dynamics are providing a strong floor for Ether’s valuation. Data from Staking Rewards reveals that a record 34% of the total circulating Ether supply is now locked in staking contracts, up from 33% just a month ago. This massive lock-up of capital significantly reduces immediate sell pressure on open exchanges. Institutional accumulation has also played a role; Bitmine Immersion (BMNR) acquired an additional 156,719 ETH over the past month, bringing its total holdings to 4.8% of the available supply.

While these supply-side dynamics offer long-term support, Ether remains 61% below its historic peak. Without a substantial revival in onchain transaction volume and DApp engagement, analysts suggest that further gains toward the $2,100 level will likely depend on external macroeconomic catalysts and continued risk-on appetite in traditional financial markets.