Yet, the ' market structure underneath has conspicuously leaned the other way.
Across , (OI), options skew and institutional positioning, data show that the speculative excess that defined the late-2024 and mid-2025 rallies has been systematically purged.
What remains is a market lean enough to move on genuine spot conviction rather than levered momentum.
Shorts paying longs into rising market
Over the past months, the funding rate regime has inverted - and stayed inverted.
Through Q3 and Q4 2025, perpetual longs consistently paid shorts to stay open, annualized rates running between +4% and +10% through the summer rally and briefly touching +31.7% during the December 2025 blow-off. That excess has been wrung out entirely. Since early February, funding has spent most of the period in negative territory, meaning short positions are now the ones paying carry, funding longs to hold exposure.
The episode peaked between 20 Apr and 24 Apr, when the 7-day rolling annualized rate bottomed at -5.28% on 22 Apr, with ETH trading at $2,375 with ETH trading at $2,375 - a multi-month high. Shorts were paying longs, in size, while price held flat to up.
As of 4 May, the rate sits at -0.37% annualized. It is no longer extreme, but the sign has not flipped. The structural short bias persists.
But every session that closes flat or higher while funding stays negative is, in aggregate, a small transfer from the short side to the long side - a slow accumulation of pressure that resolves either through short covering or price, creating a mechanical buying pressure.
(Source: CoinMetrics)
Perpetual confirms the participation picture without flattering it.
Volume peaked in the March–April window and has since declined, from an average daily of $41.2bn in mid-April to $31.9bn by early May, a -22.5% contraction in speculative activity.
Prices rose throughout the same period. Declining volume into price strength, combined with negative funding, is the textbook fingerprint of spot-led price discovery rather than derivatives-driven momentum. The derivatives market is being dragged, not leading.
Open interests sharpen the picture further. From 1 Mar, OI had been building steadily, rising from $15.5bn to $20.8bn by 18 Apr, a +34% expansion over six weeks.
But with funding deeply negative through much of that stretch, the composition of that build mattered. A book growing into negative carry is not accumulating longs. It is accumulating shorts.
The institutional book behind the book
The CME-adjacent institutional book tells a subtler story, and the Commitments of Traders (COT) report from US Commodity Trading Commission reads it precisely.
Non-perpetual open interest, the category dominated by dated CME futures and institutional hedged structures, troughed at $1.60bn in April 2025 before expanding to a peak of $11.44bn in late October as large speculators chased the rally.
It has since contracted to $4.11bn currently. That reflects institutional deleveraging - rolled hedges, reduced -adjacent structures, and large-speculator book compression as the ETH price fell from the $4,800 peak.
The COT report breaks the flow down by market participants. Commercials – dealers, , hedging underlying exposure – are the market's structural truth-tellers.
A low reading means they are maximally hedged short, implying they see price as elevated and likely to revert. A high reading means they have covered, turning net long as they no longer feel the need to protect against further downside.
(Source: CoinMetrics, COT)
At the October 2025 high of $4,121, Commercials sat at 13.3, a maximum hedge, maximum conviction position that price needed protection.
What followed was a -57% drawdown to the Feb lows. Then, in the single week ending 16 Mar, they surged +26.5 points to 54.9 - the largest weekly move in the dataset - and held: 53.7 on 23 Mar, 53.1 on 30 Mar, 57.3 on 6 Apr, 57.0 on 13 Apr.
Four consecutive weeks at or above 53 while price consolidated between $2,100 and $2,400. Dealers and market makers have stopped hedging.
Institutionals - large speculators and asset managers - ran the opposite path. They have drifted from their peak reading of 59.9 to 48.7 - their lowest reading and a contraction in net long positioning that tracks the price decline mechanically.
Retail has followed the same compression, deflating from rally-era highs toward the low-to-mid 40s, reflecting the deflation of momentum-chasing behaviour. Commercials net long, large speculators absent, retail disengaged – a configuration that precedes either a spot-driven recovery or a forced short squeeze.
The non-perpetual OI - a proxy for institutional exposure – move connects directly, jumping more than twofold from $823mn to $1.77bn in two weeks through early April, precisely as Commercials posted their highest readings.
The direction of that build is consistent with hedgers rebuilding long futures exposure against underlying positions.
From crash insurance to upside positioning
The options market has undergone a complete skew rotation over the past months.
On 6 Feb, at the price low of $1,747, put option market-value OI - the options' premium to pay for exposure - reached $910mn against just $48mn in calls, a put/call ratio of 19.1x.
The market was paying almost exclusively for downside, and for good reason.
The crash was live, and geopolitical and macro tensions were boiling over. Short-dated protection had immediate value.
(Source: CoinMetrics)
But as those hedges expired or decayed, what followed was a steady, then accelerating compression of that put premium. The pivot came decisively in the first week of April.
On 8 Apr, calls overtook puts in market value for the first time since the February reset, with $248mn calls against $193mn puts, a 0.78x ratio. From 11 Apr onwards, the call side has dominated most sessions, with the ratio consistently ranging from 0.52x to 0.93x for the rest of the month.
On 18 April, calls peaked at $314mn - nearly double the put book at $164mn. As of 3 May, puts collapsed to a multi-month low of $150.8mn, down -70.1% from the 6 Feb peak. Calls stand at $171.6mn, up +95% from the 3 Feb trough.
It reflects a market repositioning from crash protection to upside participation, not one that has convinced itself of a blow-off. Investors who were paying heavily to hedge a breakdown are now paying modestly to participate in a recovery.
The distinction between those two postures is the difference between fear-driven premium and conviction-driven premium - and the current level of call OI sits firmly in the latter category without yet pricing in the former's excess.
The residual put book - still $181.9mn - is not noise. It signals a cohort that has not fully abandoned the downside case, likely a mix of remaining macro hedges and fresh short-dated protection as price gravitates around a potential local top.
The fact that puts did not spike materially in that episode - the ratio moved only modestly – suggests the market did not interpret the April pullback as the start of a new leg down.
Spot as price action lever
Every metric above points to the same conclusion: the derivatives complex is structurally constructive and structurally empty.
Negative funding means the short book is paying rent on a position that is not working. COT commercials at their least hedged in the dataset indicate that professional hedgers see no need to protect against lower prices. Call skew has replaced put skew as the dominant options expression. And through all of it, perpetual OI is flat to declining, volume is falling, and price is grinding higher.
That combination has one clean interpretation: spot is the marginal buyer.
ETF inflows, corporate treasury accumulation, rebuilding - none of these register in futures OI, none push funding positive, and none appear in the COT. They simply move the price.
When price rises on contracting derivatives activity and negative carry, the conclusion is mechanical. A sustained recovery from here will not look like 2025. No funding spikes, no OI explosion, no options euphoria.
It will be quieter - and for that reason, harder to time and easier to miss.
