Ethereum ETF Outflows Accelerate as Nansen Says Rally Catalysts Have Faded

Ethereum is at risk of falling below $2,000 as spot exchange-traded fund outflows and slowing network activity strip away support for the token, according to Nansen.

AMB Crypto reported on May 29 that the on-chain analytics firm said in a recent report Ethereum's weakness stems from structural demand erosion rather than macroeconomic uncertainty alone. Ether fell below $2,000 in intraday trading, dropping under that threshold for the first time since March. The token is now down 19% from its roughly $2,500 peak in April.

Nansen pointed first to weakening network demand. Ethereum's average gas fee has fallen below 2 Gwei, near the lowest level of the current cycle. As user transactions and smart-contract activity have slowed, the amount of ETH being burned has also declined. That has significantly weakened the deflationary case that was once central to the Ethereum investment thesis.

The expansion of Layer 2 networks is also weighing on Ethereum. Much of the transaction volume and fee revenue that previously went to the mainnet has shifted to Layer 2s, reducing the economic value of Ethereum's main chain. Nansen researcher Nicolai Sondergaard said lower burn levels are making ETH look more like an inflationary asset again. The core narrative that underpinned investor conviction in the previous bull market has faded, he added.

Institutional flows have also deteriorated. The ETH-to-BTC ratio has fallen to about 0.027, the lowest level in a year. US spot Ethereum ETFs have posted net outflows since May 11, with monthly net outflows reaching $522 million. That is the largest monthly outflow since December 2025.

Sondergaard said the pattern throughout 2026 shows institutional interest remains focused on Bitcoin. Ethereum has yet to establish the same presence as Bitcoin.

Whale investors, by contrast, have continued buying through the recent downturn. Santiment data show wallets holding at least 100,000 ETH now control 17.4 million ETH, or about 22% of total supply. That is the highest level in 10 weeks.

Even so, overall capital flows remain negative. According to Glassnode, Ethereum's realized market capitalization has fallen to $295 billion this year from $310 billion. That implies about $15 billion has left the market.

Nansen said Ethereum needs spot ETF inflows to resume and network activity to recover before it can mount a meaningful rebound. Sondergaard said the token currently lacks all of the key catalysts that drove previous rallies. A recovery would require at least two positive drivers to emerge at the same time.