Ethereum, the second-largest cryptocurrency, has erased all its May gains after falling nearly 10% over the past week. But according to Bitmine Chairman Thomas Lee, the biggest reason behind Ethereum price decline may not actually be crypto-related at all.
In a recent X post, Lee explained that Ethereum is currently showing its strongest inverse correlation with oil prices ever recorded.
“To me, rising oil prices is the biggest headwind, ETH inverse correlation to oil is the highest ever”
That means as oil prices rise, Ethereum tends to fall.
Over the past six weeks, Brent crude oil has surged toward $110 per barrel, climbing roughly 15% amid escalating U.S.-Iran tensions and concerns surrounding the Strait of Hormuz, one of the world’s most important oil shipping routes.
At the same time, ETH price has steadily declined, touching an April low of $2,097.
According to Lee, this inverse relationship has now become Ethereum’s biggest short-term headwind. He sees the current weakness as “short-term tactical noise,” noting that if oil prices begin cooling again, Ethereum could quickly recover.
While rising oil prices are pressuring sentiment, Ethereum is also facing another major problem, i.e, weakening institutional demand.
Spot Ethereum ETFs have now recorded five consecutive trading days of outflows totaling more than $255 million over the past week.
The continued withdrawals suggest institutional investors are becoming more cautious as overall macroeconomic risks rise.
Prediction market platform Polymarket currently shows roughly a 56% probability that ETH could fall below the important $2,000 level before the end of the month.
Despite the recent decline, Lee believes Ethereum’s larger long-term story remains intact.
According to him, two major structural trends could continue supporting Ethereum through 2026, tokenization and agentic AI systems.
Many tokenized real-world assets and AI-driven blockchain applications are increasingly being built on Ethereum infrastructure, which Lee believes could drive stronger long-term demand for the network.
Despite the recent bearish sentiment around Ethereum, BitMine Immersion Technologies continues aggressively increasing its Ethereum holdings. The company now holds roughly 4.71 million staked ETH worth around $11.1 billion at an average purchase price of nearly $2,366 per ETH, making BitMine the world’s largest corporate holder of Ethereum.
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