Despite the near-term weakness, Lee still sees tokenization and AI-related infrastructure as long-term drivers for ETH.
According to Tom Lee, President of Bitmine, rising oil prices are the main reason why Ethereum (ETH) is struggling, and he claims that the inverse correlation between the two assets has reached the highest level ever recorded.
His observation comes at a time when ETH is trading near $2,100, down about 3% in 24 hours and 12% over the past month.
The oil connection
Lee laid out his thoughts in an article on X on May 18, saying that as oil prices have risen over the past six weeks, ETH has fallen at the same rate. “Rising oil prices are the biggest headwind,” he wrote, noting that the ETH-oil inverse correlation was at its “highest ever.” The implication, he says, is simple. If oil reverses, ETH is likely to rally.
However, Lee was careful to present this as short-term noise rather than a structural problem. The longer-term case, he says, still relies on two elements: tokenization of real-world assets and agentic AI.
“These structural factors are in place,” he wrote. “Thus, we expect ETH prices to be stronger as we move through 2026.”
The timing of his comments is important. ETH has been falling for weeks, and the decline accelerated on May 18 after renewed geopolitical pressure from U.S. President Donald Trump, who warned Iran that its “clock is ticking” in a Truth Social article.
In response, BTC slipped to around $76,700, its lowest level since early May, while more than $660 million in leveraged positions were liquidated in the market, with ETH accounting for $256 million of that wipeout, according to CoinGlass data.
The selling of Binance and OKX was particularly aggressive, with figures shared by analyst Amr Taha showing that taker sales volume on Binance exceeded $1.1 billion as ETH pushed towards $2,100.
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A market free of long positions
What the liquidation data shows is a market that has been largely emptied of bullish leverage. According to market watcher CW, only around $600 million in highly leveraged long ETH positions remain, while short positions have reached $6.3 billion, more than ten times the size of the long side.
They also noted that a new CME gap had formed around $2,200 and three unfilled CME gaps now sit between the current price and $3,200, removing a layer of technical downside risk.
Another trader, Crypto Ed, said Bitcoin and Ethereum had entered what he described as “green box” support zones, although he still expects further decline before any sustained recovery. ETH hit a 10-month low against BTC over the weekend, with the ETH/BTC pair falling below 0.028, a level not seen since the middle of last year.
