Betting Against Ether: A Thriving Strategy in 2025
Best Performing Exchange Traded Fund (ETF) Strategy
Betting against Ether has been the best performing exchange traded fund (ETF) strategy so far in 2025, according to Bloomberg analyst Eric Balchunas.
Two ETFs designed to take two-times leveraged short positions in Ether claimed first and second place in a Bloomberg Intelligence ranking of the year’s top-performing funds, Balchunas said in a post on the X platform.
Impressive Returns
In the year-to-date, ProShares UltraShort Ether ETF (ETHD) and T Rex 2X Inverse Ether Daily Target ETF (ETQ) are up approximately 247% and 219%, respectively, Bloomberg Intelligence data showed.
The implications for Ether are “brutal,” Balchunas said. Ether itself is down approximately 54% year-to-date on April 11, according to Cointelegraph’s market data.
How Leveraged ETFs Work
Both ETFs use financial derivatives to inversely track Ether’s performance with twice as much volatility as the underlying cryptocurrency. Leveraged ETFs do not always perfectly track their underlying assets.
Weak Revenue Performance
With approximately $46 billion in total value locked (TVL), Ethereum is still the most popular blockchain network, according to data from DefiLlama.
However, its native token performance has sputtered since March 2024, when Ethereum’s Dencun upgrade — designed to cut costs for users — slashed the network’s fee revenues by roughly 95%.
The upgrade kept the network’s revenues depressed, largely because of difficulties monetizing its layer-2 (L2) scaling chains, which host an increasingly large portion of transactions settled on Ethereum.
“Ethereum’s future will revolve around how effectively it serves as a data availability engine for L2s,” arndxt, author of the Threading on the Edge newsletter, said in a March X post.
Challenges for Ethereum
In the week ending March 30, Ethereum earned only 3.18 ETH from transactions on its layer-2 chains, such as Arbitrum and Base, according to data from Etherscan.
To fully recover Ethereum’s peak fee revenues from before the Dencun upgrade, L2’s transaction volumes would need to increase more than 22,000-fold, according to an X post by Michael Nadeau, founder of The DeFi Report.
Meanwhile, smart contract platforms — including Ethereum and Solana — suffered across-the-board declines in usage during the first quarter of 2025, asset manager VanEck said in an April report.
The diminished activity reflects cooling market sentiment as traders brace for US President Donald Trump’s sweeping tariffs and a looming trade war.
Conclusion
The recent performance of Ether, as reflected in the returns of leveraged ETFs, highlights the challenges facing the cryptocurrency. The decline in fee revenues and difficulties monetizing layer-2 scaling chains have significant implications for Ethereum’s future.
As the market navigates these challenges, it remains to be seen how Ether will recover and adapt to the changing landscape.
FAQs
Q: What is the best-performing ETF strategy in 2025?
A: Betting against Ether has been the best performing exchange traded fund (ETF) strategy so far in 2025, according to Bloomberg analyst Eric Balchunas.
Q: Which ETFs are performing well?
A: ProShares UltraShort Ether ETF (ETHD) and T Rex 2X Inverse Ether Daily Target ETF (ETQ) are up approximately 247% and 219%, respectively, year-to-date.
Q: Why is Ether performing poorly?
A: Ether itself is down approximately 54% year-to-date due to the impact of the Dencun upgrade, which slashed the network’s fee revenues by roughly 95%.
Q: What are the implications for Ethereum?
A: The implications for Ether are “brutal,” Balchunas said, highlighting the challenges facing the cryptocurrency and the need for it to adapt to the changing landscape.
Q: How can Ethereum recover its fee revenues?
A: To fully recover Ethereum’s peak fee revenues, L2’s transaction volumes would need to increase more than 22,000-fold, according to an X post by Michael Nadeau, founder of The DeFi Report.
Q: What is the current state of smart contract platforms?
A: Smart contract platforms, including Ethereum and Solana, suffered across-the-board declines in usage during the first quarter of 2025, according to asset manager VanEck.
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