Wintermute Says Ethereum Is the Wrong Trade as ETH Falls 10% This Week

TLDR

• Ethereum dropped 10.2% this week, underperforming Bitcoin and other major crypto assets.
• Wintermute said ETH is “not the right asset for this macro” as Treasury yields and inflation expectations rise.
• The ETH/BTC ratio fell toward 0.0275, showing weaker demand for Ethereum compared with Bitcoin.
• Ethereum ETF flows turned negative, with about $255 million in weekly outflows.
• Bitcoin also faces pressure, with spot BTC ETFs recording about $1 billion in outflows after six weeks of inflows.

Ethereum came under renewed pressure this week after market maker Wintermute said ETH is “not the right asset for this macro,” citing rising U.S. Treasury yields, renewed inflation concerns and weaker demand across crypto markets.

ETH fell 10.2% during the week and traded near $2,119 on May 19. The ETH/BTC ratio moved toward 0.0275, keeping Ethereum close to one of its weakest relative levels against Bitcoin in the current cycle. The move came as traders reduced exposure to assets seen as more sensitive to liquidity conditions.

Wintermute said Ethereum has underperformed across spot and derivatives markets. The firm pointed to softer ETH funding, higher relative implied volatility and outflows from Ethereum exchange-traded funds as signs that investor appetite has weakened.

Ethereum Weakens Against Bitcoin

Ethereum’s decline has been sharper than Bitcoin’s during the latest market pullback. Bitcoin fell 5.7% over the same period, while ETH lost more than 10%, according to the market data cited in Wintermute’s report.

The ETH/BTC pair has remained under pressure as investors moved away from smart-contract assets and toward simpler crypto exposure. Bitcoin has continued to attract more institutional attention because it is often viewed as the main macro asset in the digital asset market.

Ethereum’s long-term case remains linked to decentralized finance, staking, tokenization and Layer 2 network activity. However, Wintermute said the current market setting is less favorable for assets that depend on future growth and stronger risk appetite.

Treasury Yields Pressure Risk Assets

The broader macro backdrop has become more difficult for crypto markets. Long-dated U.S. Treasury yields have moved higher, while inflation data has raised questions about the timing of future Federal Reserve easing.

The 10-year Treasury yield rose to 4.58% during the week, while the 30-year yield moved deeper above 5%. Higher bond yields can reduce demand for risk assets because investors have access to safer income from government debt.

Wintermute said this environment has made Ethereum a weaker trade. The firm described ETH as a long-duration asset because much of its market case depends on future network fees, adoption across decentralized applications and stronger Layer 2 activity.

Inflation data added to market caution. April consumer prices rose 3.8% year over year, above consensus expectations, while core prices increased 0.4% month over month. Rate markets adjusted quickly, with traders reducing expectations for rate cuts and pricing a higher chance of a Federal Reserve hike later in 2026.

Bitcoin Also Faces a Demand Test

Wintermute also warned that Bitcoin is not immune to the same macro conditions. The firm said being outright long BTC at current levels means expecting institutional investors to return to spot and ETF markets even as yields rise.

Bitcoin briefly moved above $82,000 after progress on the CLARITY Act, but later reversed and ended the week near $78,000. A weekend decline toward $77,000 led to $657 million in liquidations, most of them from long positions.

ETF flows also weakened. Bitcoin spot ETFs recorded about $1 billion in weekly outflows, ending a six-week inflow streak. Ethereum ETFs saw roughly $255 million in outflows over the same period.

Glassnode data cited in the market note showed institutions selling into strength, with the seven-day moving average of ETF netflow at minus $88 million per day. Wintermute said the latest rally appeared to be driven more by leverage and short covering than by strong spot demand.

Bitcoin remains below its 200-day moving average near $82,200, a level it has failed to reclaim several times this month. Traders are watching the $76,000 to $78,000 range as near-term support. A move below $75,000 may open the way toward the low $70,000 area.

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