BTC recently surged to $120,000 and stole the spotlight, but ETH, the market's number two, has become a true underperformer. Over the past month, ETH has been grinding below $3,000, and today even briefly broke through the $2,900 level. The decline may not seem significant, but the underlying issues deserve deeper scrutiny.

**Leverage is the culprit**

ETH always lags during rallies but crashes hard during downturns—this is the classic behavior of a market dominated by leverage capital. In this 2025 cycle, ETH has already experienced two 50% drawdowns, and futures contract volume has hit record levels. The spot-to-futures ratio has been compressed to 0.2, which means what? The market's price discovery mechanism has been completely hijacked by leverage capital. Any slight disturbance—such as a major institution selling $200 million in spot—and the entire market crashes.

**The dual face of institutions**

Interestingly, some Wall Street analysts publicly proclaim that "ETH is severely undervalued," while their private internal reports hint at a possible drop to $1,800 in the first half of 2026. This playbook is quite clever—maintaining optimistic narratives publicly while preparing defensive strategies for internal clients. The result? Major corporations holding large ETH positions see their stock prices significantly underperform their actual holdings.

In the short term, this situation is difficult to reverse. Leverage risks are still accumulating, institutional true intentions remain uncertain, and the market needs time to digest these contradictions.