Ethereum selloff tests neutrality-first model amid exits

Ether traded near the $2,000 support level as market indicators showed reduced spot demand and concentrated ETF outflows. Fund trackers recorded roughly $470 million in net ETF outflows in May, and at least nine senior staff at the Ethereum Foundation have left or stepped back since February.

Blockchain analytics firm Santiment recorded higher volumes of ETH-related discussion in May but said sentiment turned negative. On-chain data from CryptoQuant showed the ETH/BTC ratio at about 0.02758, a 10-month low. CryptoQuant’s fund-tracking data indicated total institutional fund holdings fell from above 7 million ETH in October 2025 to roughly 5.5 million ETH. Ethereum ETF assets under management stood near $12.14 billion, about 23% below their January peak. The Coinbase Premium Index remained negative through May, and daily fund trading volume moved into a $17 million to $42 million range, below the one-year average.

Derivatives markets showed differing positions. Options traders paid a premium for downside protection; Block Scholes reported a seven-day 25-delta risk reversal near -7%. Clearing data from Deribit revealed put open interest concentrated above $380 million at the $2,100 and $2,000 strikes. At the same time, perpetual-futures funding rates stayed positive, with CryptoQuant recording a 0.0082 funding rate on May 21, indicating ongoing long exposure in the perpetual market. The options and futures positioning placed defensive hedges around $2,000–$2,100 while leveraged long positions persisted in perpetual contracts.

The Ethereum Foundation’s personnel changes accelerated after the organization published a Mandate in March that outlined a neutrality-first stewardship role focused on censorship resistance, open-source deployment, privacy and base-layer security. Departures since February included research veterans Carl Beek and Julian Ma, former co-Executive Director Tomasz Stańczak, board co-steward Josh Stark, Protocol Guild contributor Trent Van Epps, protocol leads Barnabé Monnot and Tim Beiko, and others. Senior researcher Alex Stokes began a three-month sabbatical in May.

Tommy Shaughnessy, co-founder of Delphi Ventures, called the exits “more serious than they appear,” arguing the moves reduce reform-minded voices inside the foundation. Former researcher Dankrad Feist proposed creating a separate organization with at least $1 billion in capital, funded in part by staking revenues, to promote ETH adoption and value accrual. Ryan Sean Adams, co-founder of Bankless, supported establishing competitive, well-capitalized institutions to pursue commercial execution. ETH investor Ryan Berckmans described the turnover as “a healthy handoff to a younger generation of developers.” Thomas Lee, chairman of BitMine, described blockchain infrastructure as a “foundational settlement highway” for AI commerce and institutional finance and noted Ethereum’s existing security record and liquidity.

Galaxy Digital outlined a recovery framework that emphasizes completing near-term upgrades such as Glamsterdam and Hegotá, clarifying administrative roles at the foundation, and concentrating resources on decentralized finance, institutional asset issuance, tokenized real-world assets and stablecoin settlement. The firm also recommended accelerating work on layer-1 scaling, on-chain privacy, post-quantum security and AI-native economic infrastructure to support institutional use cases.