Analyst Tom Lee Sees Correlation Between Surging Crude Oil Costs and Ethereum's Sluggish Performance

The recent decline of Ethereum, which has shed approximately 12% of its value over the past month and is currently trading near the $2,100 mark, has been largely attributed to the surge in oil prices, according to Bitmine Chairman Tom Lee. In a post published on X on May 18, Lee highlighted the inverse correlation between Ethereum and oil, noting that this relationship has reached an all-time high. As oil prices have risen over the past six weeks, Ethereum has correspondingly declined, with Lee emphasizing that the increase in oil prices poses the most significant challenge to Ethereum's growth.

Despite this short-term obstacle, Lee remains optimistic about Ethereum's long-term prospects, citing the tokenization of real-world assets and the development of agentic AI as key drivers of growth. He believes that these fundamental factors will ultimately lead to a strengthening of Ethereum's price as the year progresses, with the expectation that prices will be higher by the end of 2026.

The timing of Lee's comments is noteworthy, as they come amid a period of heightened geopolitical tensions, exacerbated by a recent statement from US President Donald Trump. This has resulted in a significant sell-off in the cryptocurrency market, with over $660 million in leveraged positions being liquidated, including $256 million worth of Ethereum positions. The sell-off has been particularly pronounced on platforms such as Binance and OKX, with analyst Amr Taha reporting that taker sell volume on Binance exceeded $1.1 billion as Ethereum approached the $2,100 level.

An analysis of the liquidation data suggests that the market has been largely cleared of bullish leverage, with only approximately $600 million in high-leverage long positions remaining, compared to $6.3 billion in short positions. Market observer CW notes that the formation of a new CME gap around $2,200 and the presence of three unfilled CME gaps between the current price and $3,200 have reduced the downside technical risk. Meanwhile, trader Crypto Ed believes that both Bitcoin and Ethereum have entered support zones, although he anticipates another decline before a sustained recovery can occur. The Ethereum-Bitcoin pair has also reached a 10-month low, falling below the 0.028 level, which has not been seen since last year.