Written by: Oluwapelumi Adejumo
Compiled by Saoirse, Foresight News
As Ethereum's native token, ETH, enters a mid-term downtrend, overall market sentiment has significantly declined. Data from the blockchain analytics platform Santiment shows that discussions about ETH across the network increased throughout May, but sentiment was predominantly negative, with investors widely concerned that the price may continue to fall.
Ethereum Market Sentiment (Data Source: Santiment)
Analysts note that market pressures have surged simultaneously, with multiple negative factors weighing on the行情: weak spot price performance, continuous outflows from ETFs, key personnel leaving the Ethereum Foundation, long-time community supporters publicly raising concerns, and strong competitive gains from rival blockchains such as Hyperliquid, Zcash, and Solana.
Global market data from CryptoQuant also confirms a significant cooling in institutional investment interest. With ETH's price nearing the key support level of $2,000, both spot market conditions and fundamental indicators are showing clear signs of weakness.
Ethereum has shown clear weakness relative to the broader market, with the ETH/BTC exchange rate falling to approximately 0.02758, hitting a ten-month low, indicating that Ethereum’s performance has significantly lagged behind Bitcoin during this rally. Spot investors continue to reduce their positions, market liquidity keeps shrinking, and large institutions have largely ceased entering the market to buy.
Continuous spot selling pressure is hitting Ethereum, with insufficient buying support.
Over the past two quarters, institutional holdings have consistently declined. In October 2025, institutional ETH holdings peaked above 7 million ETH, but have since retreated to around 5.5 million ETH. Throughout this prolonged price correction, major institutional investors have been reducing their core positions.
The compliant ETF market is also under pressure, with Ethereum ETF assets under management currently at approximately $12.14 billion, a 23% decline from the January peak. According to SoSoValue data, May saw a challenging market trend, with ETFs recording net outflows for two consecutive weeks, totaling approximately $470 million—among the most significant periods of concentrated capital outflows this year.
Ethereum ETF Weekly Outflows (Data Source: SoSoValue)
The Coinbase Premium Index has remained consistently negative, reflecting a lack of willingness among U.S. institutional investors to buy spot ETH. As institutional holdings decline, market liquidity for ETH has simultaneously tightened. Since February 2026, daily institutional trading volume has remained persistently below the one-year average, with recent daily trading volumes averaging only between $17 million and $42 million.
Market appetite for buying the dip has waned, and spot market trading activity remains weak; any negative news could easily trigger sharp price fluctuations.
Hedging demand in the options market is rising, but long positions on contracts remain steadfast.
While selling pressure in the spot market intensifies, the derivatives market shows significant divergence in outlooks for future price movements, with industry opinions split on whether ETH is entering a prolonged downtrend or about to bottom out and rebound.
Professional traders are actively buying put options to hedge against risk, while the perpetual futures market still maintains a large number of long positions, revealing a stark contrast in market sentiment. Block Scholes data shows that for a seven-day period, ETH’s 25-delta risk reversal skew is nearing -7%, indicating that traders are willing to pay a premium to purchase put options as protection against downside risk.
Deribit exchange data shows that the total open interest for put options with strike prices of $2,000 and $2,100 has exceeded $380 million, making these two levels the key battlegrounds for short-term institutional trading.
Ethereum options open interest (source: Deribit)
Market interpretation: A large-scale put option positioning indicates that the market generally expects prices to continue declining. The coin price has already broken below the $2,100 support level, and market risk appetite continues to wane. With insufficient spot buying pressure, the market can only rely on hedging strategies to mitigate risk.
The perpetual futures market signals are more complex. According to CryptoQuant, Ethereum's funding rates have remained consistently positive, reaching 0.0082 on May 21. Even as market capitalization, institutional holdings, and spot trading volumes all declined, speculative bullish sentiment has not fully disappeared.
Ethereum Funding Rate (Source: CryptoQuant)
The opposing long and short positions create significant uncertainty in market movement. If spot buying suddenly rebounds, it is likely to trigger a short squeeze; however, if the price falls below the key support level of $2,000, massive positions could lead to a cascade of liquidations, intensifying market volatility.
Key talent are leaving one after another, intensifying the debate over Ethereum's value.
At the same time that cryptocurrency prices have been underperforming, the Ethereum Foundation, the Swiss nonprofit responsible for Ethereum’s core development, has undergone major leadership changes.
Senior developers Carl Beek and Julian Ma have officially departed, causing internal personnel upheaval within the foundation. Carl Beek, who spent seven years with the team, was primarily responsible for beacon chain design; Julian Ma led the development of the laboratory’s incentive supervision framework.
Since February, at least nine senior personnel from the foundation have left or stepped back from core responsibilities, with five departing in May alone—including former co-CEO Tomasz Stańczak, co-head of the board Josh Stark, protocol development contributor Trent Van Epps, protocol lead Barnabé Monnot, and Tim Beiko. Senior researcher Alex Stokes has also taken a three-month leave of absence, resulting in a reduction of core technical team members during a market downturn and a gap in technical leadership.
Industry analysis suggests that the catalyst for this personnel change was the foundation's 38-page charter document released in mid-March, which established four core principles for CROPS: censorship resistance, open-source deployment, privacy protection, and underlying network security.
The document clearly defines the foundation as an ecosystem guardian, not a commercial operator, with its core responsibility being to maintain network neutrality. It does not aim to increase token prices, enhance investor returns, or drive commercial expansion.
As other blockchains continue to capture market share, the foundation’s commitment to neutrality has made it increasingly difficult to gain market recognition. Tommy Shaughnessy, co-founder of venture firm Delphi Ventures, said the negative impact of talent attrition extends far beyond what meets the eye; after reform-minded members left, internal voices challenging the current direction have all but disappeared.
Calls for reform are growing, and the neutral development model is facing serious challenges.
Many former core members believe the foundation has not pushed hard enough on commercialization and have called for adjustments to the governance structure. Dankrad Feist, a well-known researcher who left the foundation last year to join a new public blockchain project, publicly proposed establishing a completely independent institution to safeguard the network’s economic competitiveness.
He recommended that the new institution start with an initial capital of at least $1 billion, part of which would come from network staking rewards. The institution would be directly accountable to token holders, with its core mission being to expand commercial use cases for ETH and drive up the token’s market value.
Dankrad Feist noted that the Ethereum Foundation currently holds less than 0.1% of the total circulating supply, making it unable to access underlying staking rewards or on-chain transaction fees, and the ecosystem lacks a professional institution capable of actively promoting the token in capital markets.
Ryan Sean Adams, co-founder of Bankless, agrees with this perspective, arguing that Ethereum’s development cannot rely solely on the foundation. The ecosystem needs well-funded, highly competitive professional institutions focused on improving capital efficiency, communicating developmental value externally, and executing commercial projects—tasks that fall outside the foundation’s scope.
Reform proposals from various sectors do not call for abolishing the original foundation, but rather advocate for a dual-institution collaborative model: one entity remains committed to its original mission, safeguarding the neutrality of the underlying network and building public infrastructure, while the other focuses on token promotion and competing for institutional capital resources.
Bullish investors believe the market has overreacted to short-term price fluctuations, and that leadership changes are simply a normal part of team succession. Investor Ryan Berckmans noted that talent transitions are a routine aspect of a development team’s smooth generational handover. Ethereum has previously navigated regulatory challenges and management changes successfully, while also completing major technical upgrades such as the Merge and blob transactions. Its on-chain application asset value remains among the highest in the industry. Global enterprises continue to expand into stablecoins and asset tokenization, providing long-term support for the network’s growth.
Major institutional holders remain optimistic as well. Thomas Lee, Chairman of BitMine, the company with the largest ETH holding among publicly traded firms, believes the current market panic is merely a normal correction within the cycle. The company holds 5.2 million ETH, with assets exceeding ten billion USD currently staked.
BitMine Key Metrics (Source: BitMine Tracker)
Thomas Lee stated that blockchain serves as the foundational infrastructure for AI business systems and institutional financial settlements; Ethereum retains an irreplaceable industry advantage due to its mature security framework, ample market liquidity, and broad institutional recognition.
How can Ethereum overcome negative sentiment and return to an upward trajectory?
Industry insiders believe Ethereum’s future price movement depends on whether its technical roadmap and business moat can be transformed into an attractive investment thesis. Investment firm Galaxy Digital analyzed that Ethereum must steadily execute its operational plans to halt the trend of capital outflows.
The immediate priority is to successfully launch the Glamsterdam upgrade and steadily advance subsequent Hegotá version iterations, clarify internal roles and responsibilities within the foundation, and concentrate resources on core commercial pathways. Focus will be placed on high-value decentralized finance, institutional asset issuance, real-world asset tokenization, stablecoin settlement, and privacy-focused financial infrastructure. Ethereum’s neutrality and security capabilities will serve as the core competitive advantage for these initiatives.
Ethereum also needs to accelerate its deployment in the next wave of industry hot sectors, including blockchain scalability technologies, on-chain privacy protection, post-quantum security defenses, and AI-native economic systems. Relevant technical frameworks have already been incorporated into the open-source development roadmap; the current greatest challenge is coordinating collaborative development among commercial entities and institutional resources.
The foundation's charter clearly defines the guidelines for underlying technology development, but it does not specify the logic for token value growth, nor does it establish a dedicated operational entity to address competitive threats.
This price decline is no longer just a simple market correction—it’s a profound test: Can a decentralized system appropriately allocate business functions while maintaining stable operations and completing institutional restructuring?
If the ecosystem can leverage personnel changes to clarify roles and responsibilities and translate technical roadmaps into clear investment value, this downturn could become an opportunity to optimize governance models. Conversely, if no adjustments are made, persistent weakness in spot markets, frequent talent attrition, and shifting competitive dynamics may lead the market to question whether the Ethereum network can still sustain stable token value.