Open Source · Ethereum · CryptoSlate
Ethereum’s selloff tests whether its neutrality-first model can defend ETH’s value amid Foundation ‘brain drain’
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Weak spot demand, negative ETF flows and senior departures have turned Ethereum’s price decline into a broader confidence test.
Key facts
- According to CryptoQuant, daily fund trading volume has trended downward since February 2026, dropping well below its trailing 1-year moving average to a recent range of $17 million to $42 million
- This defensive posture is supported by clearing data from the Deribit exchange, where open interest for put options targeting the $2,100 and $2,000 strike prices has concentrated past $380 million
- According to the firm, total fund holdings, which peaked above 7 million ETH in October 2025, have steadily declined to a range around 5.5 million ETH
- Data from Block Scholes reveals that ETH's 25-delta risk reversal skew over a seven-day horizon has traded near-7%, indicating that options market participants are paying a premium for downside put
Summary
Ethereum’s market sentiment has deteriorated significantly as the blockchain network's native ETH token moves through a medium-term bear phase. Data from blockchain analytics platform Santiment shows that while ETH-related discussions increased in frequency throughout May, the tone of that commentary has shifted toward frustration, disappointment, and concern about deeper downside potential. Analysts at the firm noted that this shift in sentiment reflects a combination of market pressures building simultaneously, including weak spot price action, persistent exchange-traded fund (ETF) outflows, high-profile departures from the Ethereum Foundation, public criticism from longtime ecosystem supporters, and stronger price momentum across competing layer-1 networks like Hyperliquid, Zcash, and Solana. This spot weakness is most apparent in Ethereum's performance relative to the broader market.