In an unexpected turn of events, betting against Ether has emerged as the most successful exchange-traded fund (ETF) strategy for 2025 so far, as noted by Bloomberg analyst Eric Balchunas. This strategy has not only gained traction but has also proven to be significantly profitable in a challenging market environment.
According to Balchunas, two ETFs specifically engineered to take two-times leveraged short positions in Ether have secured the top two spots in Bloomberg Intelligence’s rankings for this year. The ProShares UltraShort Ether ETF (ETHD) and the T Rex 2X Inverse Ether Daily Target ETF (ETQ) have reported staggering gains of approximately 247% and 219% year-to-date, respectively.
The implications of such strategies for Ether itself are considered severe, as the cryptocurrency has experienced a downturn of about 54% in 2025. Leveraged ETFs like ETHD and ETQ aim to inversely track Ether’s performance with double the volatility, though it’s important to note that they may not always align perfectly with the underlying asset’s movements.
Moreover, Ethereum’s overall revenue performance has been underwhelming, as the platform currently has a total value locked (TVL) of approximately $46 billion, maintaining its status as the most dominant blockchain network. However, the native token has suffered a significant decline since March 2024, particularly after the Dencun upgrade, which aimed to lower transaction costs for users but inadvertently reduced fee revenues by about 95%.
As Ethereum’s fee revenues remain suppressed, the challenges in monetizing its layer-2 (L2) scaling solutions—where a considerable share of transaction activities are processed—continue to present obstacles to its recovery. The engagement with layer-2 solutions is pivotal; industry experts, including Arndxt, have highlighted that Ethereum’s future hinges on its ability to function effectively as a data availability engine for these L2 networks.
In the week ending March 30, Ethereum reportedly earned only 3.18 ETH from transactions on its layer-2 platforms, such as Arbitrum and Base. To restore its peak fee revenues from before the Dencun upgrade, a remarkable increase in layer-2 transaction volumes—over 22,000-fold—would be required.
This downward trend in Ethereum’s performance is also reflected in broader market conditions, as notable smart contract platforms, including Ethereum and Solana, have experienced widespread drops in usage during the first quarter of 2025. This decline mirrors a general cooling in market sentiment, spurred by concerns over impending tariffs and a potential trade war under the Biden administration.
As the market navigates these turbulent waters, the sentiments surrounding Ether and its related ETFs will remain an area of keen interest for investors and analysts alike.
