In 2025, Ethereum continues to face significant challenges, leading to a rise in short bets on its asset. Let's explore the key aspects of the current situation.
Overview of Short-Bet ETFs
In a year marked by a persistent slump in Ethereum prices, strategies aimed at betting against it have emerged as the top-performing approach in the exchange-traded fund market. According to Bloomberg analyst Eric Balchunas, the ProShares UltraShort Ether ETF (ETHD) and the T Rex 2X Inverse Ether Daily Target ETF (ETQ) have recorded a significant rise of 247% and 219% respectively. These funds provide investors with leveraged short exposure to Ether, designed to profit as Ethereum prices fall.
Ethereum Update Issues and Their Implications
Despite current price challenges, Ethereum remains the most widely used blockchain in decentralized finance, managing around $46 billion in total value locked. However, this has not resulted in increased earnings. Following the anticipated Dencun upgrade in March, aimed at reducing fees, Ethereum's fee revenues have plunged by an estimated 95%. This negatively impacts Ethereum's ability to monetize activity on its L2 networks.
Impact of Macroeconomic Factors on the Ethereum Market
Broadened market jitters have also contributed to the deterioration of the situation. Asset manager VanEck reported a notable drop in activity on smart contract platforms, including Ethereum and Solana, during Q1 2025. This decline reflects a cooling investor appetite amid fears of a looming trade war and new tariffs proposed by former President Donald Trump.
The short-term prospects for Ethereum remain uncertain, and despite the popularity of short bets, internal and external issues continue to put pressure on the asset.
