Tom Lee points out that rising oil prices are the main driver of Ethereum’s weakness

Tom Lee, a well-known cryptocurrency bull and founder of BitMiner Immersion Technologies, posted on X (formerly known as Twitter) earlier today, May 18, 2026, and stated that there is an unusual link that explains Ethereum’s recent price weakness. According to the post, there is a record negative correlation between Ethereum’s daily returns and West Texas Intermediate (WTI) crude oil prices.

Lee showed with the help of various charts that Ethereum’s daily returns have reached a historic low correlation of around -0.4 with WTI, as oil rose by almost 23% in the previous month amid renewed geopolitical tensions. BitMine founder Immersion clearly stated that rising oil prices were the biggest challenge facing Ethereum in the short term, but stronger long-term factors are expected to support ETH until 2026.

Lee framed the relationship between oil and ether as more of a short-term market distraction than a real shift in the fundamental strength of Ethereum. He noted that as oil prices have risen over the past six weeks, ETH has fallen, suggesting that if oil declines, there is a possibility that Ethereum will regain its momentum. He also stressed that Ethereum’s larger long-term growth drivers remain unchanged, especially scaling Asset tokenization in the real world And increased demand from Agent AI systems Which will likely rely on smart contract platforms.

At the time of publication, the price was Ethereum-3.24% The price of the token is at $2,117.10 with a 3.3% drop in the last 24 hours according to CoinGecko.

Why might oil hurt cryptocurrencies in the short term?

Economists and market strategists point to several mechanisms by which oil’s rally could spill over into risk assets, including cryptocurrencies. First, higher oil prices typically raise headline inflation expectations, which can pressure real yields and induce risk aversion in stocks and speculative assets.

Second, an oil shock may weaken growth prospects in energy-importing economies, eroding risk appetite and reducing liquidity available for assets with higher betas. Third, increasing energy costs can increase uncertainty and volatility, encouraging a shift to safer stores of value or cash.

Cryptocurrency markets are particularly sensitive to shifts in overall risk sentiment. Unlike some assets with more straightforward cash flow profiles, many participants treat ETH and other cryptocurrencies as speculative exposures, so a wave of inflation fears or risk aversion could trigger significant price movements. The recent inverse correlation highlighted by Lee, a negative reading of 0.4 at the low, indicates that during the measured window, oil gains coincided with Ethereum sell-offs. Correlations are window dependent and can flip quickly, but the current reading suggests a meaningful short-term relationship worth monitoring.

Short-term tactical implications

For traders and risk managers, the important lesson is that short-term cryptocurrency strategies must take into account broader macro profiles such as oil prices and inflation when managing positions or hedging risks. If oil prices continue to rise, Ethereum may remain under pressure until market volatility subsides or strong positive developments, such as major tokenization partnerships or faster AI-driven adoption, help counteract this weakness.

Lee’s view is that this pressure is temporary, which is in line with how experienced investors typically view market relationships. During periods of stress, assets tend to move more closely together, but these relationships usually weaken once conditions stabilize. If oil prices stabilize or decline, the pressure on ETH and other risky assets may dissipate, allowing Ethereum’s long-term growth engines to regain control.

Institutional ETH accumulation is reshaping market dynamics

Meanwhile, at the beginning of this month, May 2026, growing institutional interest in Ethereum adds another important factor to the market dynamics.

Recent reports indicate that The Ethereum Foundation sold 10,000 ETH to BitMine Through an over-the-counter (OTC) transaction as part of its treasury strategy to fund operations, research and development of the ecosystem. The sale was completed at an average price of around $2,292 per ETH.

Meanwhile, BitMine, led by Tom Lee, has continued to build its position in Ethereum and now reportedly holds about 5.2 million ETH, or about 4.3% of the total supply. However, the company has slowed the pace of purchasing and now expects to reach its 5% ownership target by December rather than earlier in the year.

Large institutional buyers could reduce the amount of Ethereum available on the open market, which could tighten supply and lead to sharp price fluctuations. Heavy accumulation can also shape trading behavior, as some investors may buy in anticipation of continued institutional demand.

At the same time, concentrated ownership also raises concerns about market influence and centralization of staking, especially if a single entity controls a significant share of the Ethereum supply.

What are you watching next?

Oil prices and inflation matter in the short term: If oil prices continue to rise and inflation remains high, Ethereum It may face more selling pressure because investors typically avoid riskier assets during uncertain macro conditions. If oil prices decline, Ethereum (ETH) could recover more easily.

Buying activity at BitMine is significant: If BitMine continues to buy ETH or manages to secure large private trades, there will be fewer coins available in the market and this is something that could increase the price of the token. If the company slows down purchases or sales of its holdings, the pressure may ease.

On-chain data provides real evidence: Wallet activity, treasury disclosures, dashboards, and large transaction movements can help investors track what major ETH holders are actually doing rather than relying solely on headlines.

Long-term dependence remains key: Growth in real-world tokenized assets, institutional blockchain use, and AI-driven demand for Ethereum-based smart contracts could boost the value of ETH in the long term.

Final thoughts

Tom Lee’s view that Ethereum’s recent weakness is linked to its unusually negative correlation with oil suggests that macroeconomic shocks could temporarily shape cryptocurrency prices. While this may be important for short-term trading, many analysts still believe that Ethereum’s long-term growth story, driven by the token and AI-related demand expansion, remains strong. At the same time, BitMine adds new concerns about liquidity, supply concentration and market impact.

For investors, careful tracking of macro trends and on-chain data will be essential to determine whether the current pressure is just temporary fluctuations or part of a larger market shift.

Read also: Ethereum underperformed Bitcoin as ETH/BTC reached a 10-month low