BTC recently surged to $120,000 and had its moment of glory, but ETH, the market's second-largest asset, has become the true passive player. Over the past month, ETH has been grinding below $3,000, and today even momentarily dropped below the $2,900 mark. The decline may not seem significant, but the underlying issues warrant deeper investigation.

**Leverage is the root cause**

ETH's rallies always hesitate, but its declines are brutal——a typical manifestation of leverage-dominated markets. In this 2025 rally, ETH has already experienced two consecutive halvings, with futures market contract trading volumes hitting record highs. The spot-to-futures ratio has compressed to 0.2, which means what? The market's price discovery mechanism has been completely hijacked by leverage capital. Just the slightest disturbance——like a major institution dumping $200 million in spot holdings——sends the entire market into free fall.

**The two-faced nature of institutions**

Interestingly, some Wall Street analysts publicly tout "ETH is severely undervalued," while their internal reports behind closed doors hint at a possible drop to $1,800 in the first half of 2026. This operating approach is quite sophisticated——maintaining an optimistic narrative externally while privately preparing defense strategies for their clients. The result is that those listed companies heavily exposed to ETH show stock performance significantly weaker than their actual holdings.

In the short term, this situation will be difficult to reverse. Leverage risks continue accumulating, institutional true intentions remain cautious, and the market needs time to digest these contradictions.