Ethereum drops 12.6% in May as $401M in ETF outflows hit sentiment

Ethereum faces a pivotal June as the Glamsterdam upgrade and ETF flow dynamics compete to determine whether the second-largest cryptocurrency can recover from its worst monthly loss of 2026.

Ethereum fell 12.6% in May to close near $2,091, its steepest monthly decline this year, as $401.62 million in spot ETF outflows weighed on prices.

"ETF outflows of this magnitude create a self-reinforcing cycle — institutional selling pressures spot prices, which triggers further redemptions," Nina Volkov, crypto markets analyst at Edgen, said. "The $400 million-plus May exodus is the largest monthly ETF drain since January."

The outflows extended a trend that saw BlackRock's IBIT ETF record its largest single-day outflow of $527.8 million in late May, contributing to an eight-day losing streak totaling nearly $1.8 billion in redemptions. Ethereum's price now sits 57% below its all-time high of $4,946 set in August 2025, according to CoinGecko data. The decline came as geopolitical tensions between the US and Iran pushed investors toward safer assets, with crypto futures open interest falling 1.2%.

The Glamsterdam upgrade, targeting a June 2026 mainnet launch, represents Ethereum's most significant execution-layer overhaul since the Merge. The upgrade is expected to cut gas fees by 78.6% and push throughput to 10,000 transactions per second — a catalyst that Citigroup says could drive ETH to $3,175, while Standard Chartered projects a year-end target of $7,500.

$401M Outflow Caps Brutal May for ETH

The $401.62 million in spot ETF outflows marked the worst monthly institutional selling pressure for Ethereum since the products launched. Cumulative net inflows still stand at $12.05 billion, but the pace of redemptions has accelerated. On a positive note, spot Ethereum ETFs pulled in $187 million in their strongest weekly inflow of 2026, suggesting some dip-buying interest.

On-chain data tells a more constructive story beneath the price action. Accumulation wallets hit a record 26.55 million ETH in 2026, up 32% since January. Roughly 30% of all circulating ETH is now staked and locked away from liquid supply, reducing available inventory.

Glamsterdam Upgrade Looms as Key Catalyst

The Glamsterdam upgrade, which developers say could slip to Q3 if testing encounters delays, is the single biggest catalyst on Ethereum's horizon. The upgrade introduces ePBS, bringing block building on-chain. Historical precedent favors a pre-upgrade rally: the Pectra upgrade in May 2025 coincided with ETH climbing from $1,800 toward $4,946 over three months.

BlackRock has also filed for ETHB, a staked Ethereum ETF that would distribute native staking yield directly to shareholders. If approved by the SEC, the product could open Ethereum's yield argument to millions of investors who currently hold bonds and savings products with similar return profiles.

Key Levels to Watch in June

Ethereum's immediate support sits at $2,085, a level tested multiple times in May. A break below that opens the path to the February 2026 low of $1,743. On the upside, resistance at $2,400 must clear for any sustained recovery toward $3,000. The $7.5 billion in crypto options set to expire in early June, with Ethereum's max pain level under $2,000, could inject additional volatility.

Tom Lee, chairman of BitMine Immersion Technologies, has outlined long-cycle Ethereum price targets of $12,000, $22,000, and $62,000 depending on Bitcoin's trajectory and Ethereum's expanding role in tokenization. BitMine, which holds the largest Ether treasury among public companies, added another 60,000 ETH to its holdings in May.

This article is for informational purposes only and does not constitute investment advice.