Ethereum usage hits a new high, but ETH continues to decline, approaching the longest decline since 2018

Ethereum (ETH) has been declining for six consecutive months since September 2025, dropping from the all-time high of $4,953 in August to below $2,000, a decline of about 60%. This is approaching the longest monthly decline streak since the crypto winter of 2018. The paradox is that Ethereum network usage is hitting all-time highs, with the 7-day moving average of daily transactions reaching nearly 2.9 million in early February.

Structural Contradiction Between Record Usage and Falling Prices

The strong usage of Ethereum is mainly driven by growth in real-world asset tokenization (RWA), widespread stablecoin adoption, and a significant increase in layer 2 activity after the Dencun upgrade. However, this “success” has exposed cracks in traditional valuation frameworks.

The core idea of the “supersonic money” argument is that EIP-1559’s fee burn mechanism reduces ETH supply over time. Yet, the Blob data introduced with the Dencun upgrade significantly lowers rollup operation costs, which in turn reduces mainnet fees. Ultrasound.money data shows that during certain periods, ETH issuance has exceeded the amount burned, weakening the simplified narrative that Ethereum is always deflationary.

From a market structure perspective, Ethereum futures open interest has plummeted from nearly $70 billion in August 2025 to about $24 billion (CoinGlass data), indicating a sharp decline in market risk appetite. Deribit options data shows implied volatility spiking short-term and turning severely negative skewed—traders are paying premiums to hedge against downside risk.

Key Data on Ethereum’s Current Situation

• Duration of decline: Six months since September 2025, approaching the longest monthly decline since 2018.
• Price drop: From $4,953 in August to below $2,000 (~60%).
• Usage: 7-day average daily transaction volume hit a record high of nearly 2.9 million in early February.
• Open interest: Fell from a peak of $70 billion to about $24 billion (a 65% drop).
• ETH ETF fund flows: Over the past four months, nine Ethereum ETFs listed in the US have collectively redeemed $2.6 billion.
• USDT market cap: Declined for two consecutive months, a first since the Terra collapse in 2022.

Three Major Capital Flow Indicators Show Weak Bull Support

Whether Ethereum can sustain a rebound depends not on usage but on the quality of capital formation. Currently, three key indicators are unfavorable for bulls.

• First: Continuous net redemptions of Ethereum ETFs. Over the past four months, nine US-listed ETH ETFs have net outflows of $2.6 billion. When ETF flows are non-structurally negative, any rally relies heavily on derivatives markets, increasing market fragility.
• Second: Institutional buying has significantly slowed. ETHZilla, a firm focused on Ethereum asset management, has sold its holdings and shifted to tokenized real-world assets. In recent months, BitMine has become the only major buyer.
• Third: Stablecoin supply stagnation. Tether’s USDT market cap has declined for two months straight, a first since the Terra collapse. When stablecoin supply is flat, price rebounds tend to be leverage-driven volatility rather than sustained spot accumulation.

If the decline continues into March 2026, ETH’s consecutive downtrend will match the 2018 crypto winter. A true reversal may require three conditions to align: institutional ETF inflows stabilize, stablecoin purchasing power recovers, and macro risk sentiment eases.

Frequently Asked Questions

Q: Ethereum usage hits a record high, why is ETH price still falling?
The core contradiction is that while layer 2 rollups boost overall usage, they also reduce mainnet fee revenue, weakening the “supersonic money” deflation narrative. Meanwhile, persistent ETF outflows, stagnant stablecoin supply, and de-leveraging in derivatives markets suppress the structural buying needed to support spot prices.

Q: What factors could end ETH’s monthly decline?
Three main conditions could change the trend: US Ethereum ETF net inflows instead of outflows; stablecoin supply growth resumes, supporting on-chain buying power; macro environment improves, boosting risk appetite. If these conditions align, the market may reassess Ethereum’s value based on its “settlement layer indispensability.”

Q: How is Ethereum’s current decline different from the 2018 crash?
The 2018 crash occurred during an early stage when the industry lacked product-market fit. In 2026, Ethereum is a more mature network with deep institutional ties and active on-chain activity. The current decline is more about market testing new valuation frameworks under pressure rather than a fundamental collapse of the industry.