BTC recently surged to $120,000 and enjoyed a moment of glory, but ETH, the market's second-largest player, has become the true passive participant. Over the past month, ETH has repeatedly hovered below $3,000, and today it even briefly fell below the $2,900 threshold. The decline doesn't seem significant, but the underlying issues behind it are worth a deep dive.

**Leverage as the Catalyst**

ETH's tendency to lag behind during rallies and fall quickly during downturns is a typical sign of a market dominated by leveraged funds. In this cycle of 2025, ETH has already been halved twice, with futures trading volume reaching record highs. The ratio of spot to futures trading has dropped to 0.2. What does this mean? The market's price discovery mechanism has been completely hijacked by leverage. Any small disturbance—such as a major institution selling $200 million worth of spot—can trigger a market-wide sell-off.

**The Two-Faced Role of Institutions**

Interestingly, some Wall Street analysts publicly proclaim that "ETH is severely undervalued," while internal reports privately suggest that ETH could drop to $1,800 in the first half of 2026. This operational approach is quite clever—maintaining an optimistic narrative externally while preparing defenses internally. As a result, companies heavily invested in ETH see their stock prices perform far worse than their holdings would suggest.

In the short term, this situation is unlikely to reverse. The risks associated with leverage are still building, institutional attitudes remain cautious, and the market needs time to digest these contradictions.