As the native token ETH entered a sustained medium-term downtrend, market sentiment deteriorated sharply despite rising online discussion volumes in May. Data compiled by Woofun AI shows that public discourse turned overwhelmingly negative, with investors fearing further price erosion driven by weak spot prices, continuous ETF outflows, and high-profile departures from the Ethereum Foundation. Competitors such as Hyperliquid, Zcash, and Solana have simultaneously strengthened their market positions, exacerbating the pressure on 以太坊. Institutional enthusiasm has cooled significantly, with ETH prices approaching the critical $2,000 support level while both spot market activity and fundamental indicators display clear weakness. The ETH-to-比特币 exchange rate has plummeted to approximately 0.02758, marking a ten-month low and underscoring ETH's underperformance relative to the broader market cycle.

Spot investors have systematically reduced their holdings, eroding market liquidity as major institutions halted new purchases. Over the past two quarters, institutional holdings have contracted continuously; while October 2025 saw holdings exceed 7 million coins, current levels have retreated to roughly 5.5 million coins. The compliance ETF market reflects this exodus, with total asset management dropping to approximately $12.14 billion, a 23% decline from its January peak. Per Woofun AI data, market conditions in May were particularly severe, with ETFs recording net outflows for two consecutive weeks totaling around $470 million. The Coinbase premium index remained negative throughout the period, indicating a complete lack of interest from American institutional investors in the spot market. Consequently, average daily institutional trading volume has declined steadily since February 2026, ranging between $17 million and $42 million, far below the annual average.

Divergent views have emerged within the derivatives market regarding ETH's future trajectory. While spot selling pressure intensified, professionals aggressively purchased put options to hedge against downside risk, contrasting with the perpetual contract market which still held substantial long positions. Data from Block Scholes indicates that the 25-delta risk reversal deviation over a seven-day period approached -7%, signaling traders' willingness to pay premiums for downside protection. On the Deribit exchange, the total open interest for put options with strike prices of $2,000 and $2,100 exceeded $380 million, establishing these levels as focal points for short-term institutional contention. This large-scale deployment suggests a market expectation of continued weakness, forcing reliance on hedging operations due to insufficient spot market support.

Conversely, signals from the perpetual contract market remain complex. According to CryptoQuant, the funding rate for Ethereum contracts stayed positive, reaching 0.0082 on May 21, indicating that speculative bullish sentiment has not entirely vanished despite the decline in market value and institutional holdings. This divergence creates significant uncertainty; a sudden surge in spot buying could trigger a bearish sell-off, while a breach of the $2,000 support level might precipitate a cascade of margin calls, amplifying volatility. Simultaneously, the Ethereum Foundation, the Swiss non-profit overseeing 以太坊 development, has undergone significant senior management turmoil. Senior developers Carl Beek and Julian Ma officially resigned, with at least nine senior members leaving or stepping back from core roles since February, including five departures in May alone.

The exodus includes former co-executive director Tomasz Stańczak, joint board leader Josh Stark, protocol development contributor Trent Van Epps, and protocol section leaders Barnabé Monnot and Tim Beiko. Senior researcher Alex Stokes also took a three-month leave, creating a leadership vacuum during a period of market fragility. Industry analysts attribute these changes to a policy document released in mid-March, which established four principles for CROPS: resistance to censorship, open-source deployment, privacy protection, and underlying network security. The document defined the foundation's role strictly as an ecosystem guardian focused on network neutrality, explicitly rejecting commercial expansion or token price appreciation as primary goals. Woofun AI notes that as other public chains capture market share, adhering to this neutral philosophy has become increasingly difficult for the foundation to justify to the market.

Tommy Shaughnessy, co-founder of Delphi Ventures, argued that the negative impact of these departures extends beyond surface-level personnel changes, noting that the exit of reform-minded members silenced internal dissent regarding the development direction. Many departing core members felt the foundation failed to promote commercialization sufficiently and called for governance adjustments. Dankrad Feist, a researcher who left to join a new public chain project, proposed establishing a new independent organization with at least $1 billion in initial capital, partly funded by network staking revenues. This entity would be accountable to token holders and tasked with expanding commercial applications to drive market value. Feist highlighted that the Ethereum Foundation holds less than 0.1% of the total circulating supply, preventing it from benefiting from staking revenues or transaction fees, leaving the ecosystem without a professional body dedicated to capital market promotion.

Ryan Sean Adams, co-founder of Bankless, concurred, stating that 以太坊 development cannot rely solely on the foundation. The ecosystem requires professional organizations with robust financial resources to improve capital utilization, communicate development values, and execute commercial projects—tasks outside the foundation's scope. Reform proposals advocate for a dual-institutional model: one entity maintaining network neutrality and public infrastructure, while another focuses on token promotion and competing for institutional capital. Despite these challenges, some bullish investors view the market reaction as an overinterpretation of short-term fluctuations. Investor Ryan Berckmans described talent turnover as a normal phenomenon, citing 以太坊's history of navigating regulatory and management changes while completing major technological innovations like the merge and blob transactions.

Major institutional holders remain optimistic about the long-term outlook. Thomas Lee, chairman of BitMine, the largest listed company holder of ETH with 5.2 million coins, characterized the current panic as a normal cyclical correction. With over $1 billion in assets staked, Lee emphasized that blockchain serves as the underlying infrastructure for AI business systems and institutional financial settlements. He argued that ETH retains irreplaceable advantages due to its mature security, liquidity, and institutional recognition. Galaxy Digital analysis suggests that halting fund outflows requires successful implementation of operational plans, including the Glamsterdam upgrade and subsequent Hegotá version iterations. Priorities include clarifying foundation responsibilities and concentrating resources on high-value decentralized finance, institutional asset issuance, real-world asset tokenization, and stablecoin settlement. Woofun AI analysis suggests that while 以太坊's neutrality and security are key advantages, the immediate challenge lies in coordinating commercial entities and institutional resources to transform technical roadmaps into tangible investment value. If the ecosystem fails to adjust its institutional divisions and commercial functions, continued spot market weakness and personnel losses may raise fundamental doubts about the network's ability to support stable token values.