Ethereum Fails to Rally Despite Bullish Vitalik Sentiment

• Ethereum sentiment turned bullish after Vitalik’s comments, but ETH still failed to break key resistance.
• ETF outflows, whale shorts, and weak spot demand kept Ethereum under pressure despite active buying.
• Ethereum dropped nearly 29% this year as traders shifted focus toward Solana and rival blockchains.

Ethereum failed to build on early gains this week, even after Vitalik Buterin said the Ethereum Foundation may cut back on future ETH sales from its treasury. Traders initially reacted positively, but the recovery faded quickly as broader weakness in crypto markets kept pressure on prices.

ETH briefly climbed nearly 5% from its weekend low near $2,020 before losing strength around the $2,115 level. Moreover, Ethereum remains down roughly 9% over the past two weeks as investors continue reducing exposure to risk assets.

On-chain analytics platform Santiment highlighted the growing gap between trader sentiment and actual price action. “The Ethereum Foundation just promised to sell less ETH. Sentiment turned bullish. ETH price barely moved,” the platform wrote on X.

Additionally, Santiment data showed discussions surrounding Buterin reached nearly 76% bullish sentiment across crypto communities. However, the optimism failed to trigger strong spot demand or push Ethereum above key resistance levels, signaling that traders still remain cautious despite improving sentiment.

Ethereum Sentiment Improves Faster Than Demand

Ethereum traded lower through most of May, slipping from above $2,330 at the start of the period to near $2,020 during a weekend selloff, according to data tracked by Santiment. The token later stabilised but failed to recover its earlier losses, extending a broader downtrend across crypto markets.

The shift in sentiment came after Vitalik Buterin said the Ethereum Foundation plans to become leaner and gradually reduce ETH sales from its treasury. Traders quickly read the update as a positive signal for long-term supply pressure and turned more optimistic in response.

However, price action did not follow the mood shift. Santiment noted the gap directly, saying, “Less ETH for sale. Same ETH price.” Despite improved sentiment, Ethereum remained stuck in consolidation rather than forming a sustained rebound.

Moreover, social data pointed to weakening trader confidence through May. The platform reported Ethereum’s bullish-to-bearish comment ratio dropped from above 2:1 in April to nearly balanced levels. As a result, online discussions shifted from optimism to frustration as buyers failed to regain control of momentum.

ETF Outflows and Ecosystem Tensions Add Pressure

Santiment further said in an earlier post that Ethereum remained under pressure through May as ETF outflows and weakening sentiment weighed on demand. 

Spot Ethereum exchange-traded funds recorded steady withdrawals over the month, including notable outflows from BlackRock-linked products. At the same time, inflows above $50 million disappeared over the past three weeks, pointing to fading institutional interest.

The trend only further fueled pessimism among traders, who viewed ETF outflows as an indicator of institutional withdrawal from the space. With prices falling, fear rising, and more selling taking place, a vicious circle was established.

Also fueling negative sentiment were the issues surrounding the project’s ecosystem. Some researchers and contributors affiliated with the Ethereum Foundation took a step back from their public role or decreased activity. One of them, co-founder of Bankless David Hoffman, acknowledged that he sold his ETH tokens.

There was also continued competition between different blockchains, leading to a greater focus by traders on other projects. Despite the fact that Ethereum is the leader in terms of development and infrastructure, traders’ attention turned to Solana, BNB Chain, and others.

Related: Ethereum Foundation To Step Back As Ecosystem Matures, Says Vitalik

Aggressive Buying Still Fails to Lift ETH

Ethereum slipped from $2,375 on May 11 to nearly $2,031 by May 23, even as market data showed active buying interest. The decline came during a period of conflicting signals across spot and derivatives markets, according to CryptoQuant.

Analyst Carmelo Alemán noted that buyers remained active in both spot and futures markets. However, large limit sell orders consistently absorbed that demand, preventing any sustained rebound in price. Spot trading volume also fell more than 45% over the period, while futures open interest stayed mostly flat, showing weak conviction from leveraged traders.

CryptoQuant stated, “Aggressive buying exists in both spot and futures, but it is being absorbed by limit sell orders.” At the same time, funding rates remained positive even as Ethereum continued to decline. Consequently, long traders kept paying premiums despite worsening price action.

Exchange flow data added another layer of contradiction. Ethereum recorded about 80,507 ETH in net outflows from exchanges, a pattern that usually signals accumulation. However, prices still weakened as selling pressure outweighed incoming demand.

Whale Short Position Draws Market Attention

Ethereum came under added pressure this week after a large leveraged short position signaled growing bearish conviction in the market. Blockchain tracker Lookonchain reported that a trader identified as “0x50b3” opened a 47,604 ETH short position worth nearly $100 million.

The position carries a liquidation level near $2,149, placing it close to current price levels. As a result, even a modest upward move could trigger forced covering and add volatility to the market.

As of writing, Ethereum traded near $2,117, according to CoinGecko data, leaving the position tightly positioned against short-term price swings. 

At the same time, Ethereum remains under broader pressure. The token is down roughly 29% this year and continues to lag Bitcoin, while also tracking weakness across major altcoins.

Related: Ethereum Price Prediction: Bankless Founders Sold Their ETH — Here’s What the Chart Says Next