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Ethereum is entering one of its most precarious periods since its inception. Usage on the base layer is plummeting, core metrics are nearing multi-year lows, and even co-founder Vitalik Buterin is proposing a radical architectural overhaul.\u00a0<\/p>\n
Institutions aren\u2019t waiting to see how it plays out. Blockchain data shows that long-time supporters such as Galaxy Digital and Paradigm have been slashing their Ether (ETH<\/a>) holdings in recent weeks.\u00a0<\/p>\n So far in April, Ethereum\u2019s base-layer activity has continued to collapse. Ethereum\u2019s network fees are dropping<\/a>, and inflation has been rising<\/a>. Though layer-2 networks<\/a> continue to develop, they\u2019re cannibalizing the base layer\u2019s value capture<\/a>.<\/p>\n But the story isn\u2019t entirely about Ethereum\u2019s collapse. Some whales are treating this downturn as a rare buying opportunity. Even those who are selling Ether can\u2019t fully let it go.<\/p>\n Institutions are dumping Ethereum, but it\u2019s the ex they keep checking on. It\u2019s not entirely out of the picture \u2014 just benched while they explore options like Solana (SOL<\/a>).<\/p>\n In recent weeks, blockchain analysts on the lookout for large crypto movements spotted several institutions moving ETH out of their tagged wallets, likely to sell. Lookonchain reported<\/a> that Galaxy Digital deposited 65,600 ETH ($105.5 million) to Binance. The investment firm\u2019s Ether exposure rose to as high as around 98,000 coins in February, but that has dropped to almost 68,000 ETH at the time of writing, Arkham data shows.<\/p>\n Galaxy\u2019s holdings may have declined in recent weeks, but they\u2019re still higher compared to the start of the year. Its Ether holdings reflect a broader trend seen in Ethereum-based investment products. According<\/a> to CoinShares, ETH funds saw $26.7 million in outflows over the past week, bringing total outflows to $772 million over eight weeks. However, year-to-date flows remain positive, with $215 million in net inflows.\u00a0<\/p>\n As Galaxy trimmed its Ether holdings, it also withdrew 752,240 SOL ($98.37 million), Lookonchain reported. Ethereum lost considerable momentum to Solana<\/a>, which became the chain of choice during the memecoin casino frenzy that dominated much of 2024 and early 2025. While that eventually cooled amid rampant scams<\/a>, bots and low-quality tokens, it also served as a technical showcase for Solana \u2014 proving its ability to process massive transaction volumes without major fee spikes or outages.<\/p>\n Related: <\/strong><\/em>Pump.fun\u2019s memecoin freak show may result in criminal charges: Expert<\/strong><\/em><\/a><\/p>\n Paradigm is another investor that has cut back on Ether. On April 21, it moved<\/a> 5,500 ETH ($8.66 million) to Anchorage Digital. Paradigm transferred around 97,000 ETH (around $301.57 million) to Anchorage from January 2024, which was then moved to centralized exchanges, as onchain analyst EmberCN pointed out<\/a>.<\/p>\n \u201cWhile institutional investors initially bought into the \u2018ultra-sound money\u2019 narrative, they\u2019re now facing a reality where decreasing protocol revenue and weakening tokenomics create legitimate concerns,\u201d Jayendra Jog, co-founder of Sei Labs, told Cointelegraph.<\/p>\n Ether deflation has been an attractive selling point to Ethereum investors. It was integrated into the network through two major upgrades. First, the London hard fork of August 2021<\/a> introduced Ethereum Improvement Proposal 1559, which partially burns transaction fees. Then in the Merge upgrade of September 2022<\/a>, Ethereum became a proof-of-stake network and drastically cut new token issuance.<\/p>\n Ether\u2019s supply consistently decreased following the Merge until April 2024, when Ether\u2019s inflation began to accelerate. By early February 2025, the total ETH supply had surpassed its Merge level.<\/p>\n Part of Ether\u2019s inflation has been due to dropping fees, which results in less Ether burned. According to data from IntoTheBlock, Ethereum collected 1,873.52 ETH in fees from April 14 to April 21. That\u2019s slightly higher than the 1,697.61 ETH in fees from the week starting on March 17, which was the lowest amount of fees collected (measured in ETH) since July 31, 2017.<\/p>\n On April 20, Buterin proposed the RISC-V instruction set to substitute the current Ethereum Virtual Machine<\/a> contract language, aiming to improve the speed and efficiency of the network\u2019s execution layer. Some view the proposal as a white flag on the existing architecture.<\/p>\n \u201cVitalik\u2019s RISC-V proposal is essentially an acknowledgment that the EVM\u2019s fundamental architecture has reached its limits. When Ethereum\u2019s founder proposes replacing the core VM that underpins the entire ecosystem, it signals not evolution but recognition of a design limitation that can\u2019t be incrementally improved,\u201d Jog said.<\/p>\n Cointelegraph has reached out to the Ethereum Foundation and will update this article when it answers.<\/p>\n Related: <\/strong><\/em>A guide to crypto trading bots: Analyzing strategies and performance<\/strong><\/em><\/a><\/p>\n The proposal follows a leadership shuffling in the Ethereum Foundation<\/a> following rising complaints on the project\u2019s direction.\u00a0<\/p>\n Part of Ethereum\u2019s struggles has been attributed to its rollup-centric approach to scaling its network. The idea was to build layer-2 scaling networks that would offload the transactions from the base chain but still utilize its security. That has alleviated congestion issues during times of high network demand but has also created new problems of its own, such as dropping Ether burns and fragmentation of the Ethereum ecosystem.<\/p>\n But there is an increased focus on layer-1 scaling<\/a>, according to Tomasz Sta\u0144czak, the new co-executive director of the Ethereum Foundation. Sta\u0144czak said on X that the Ethereum Foundation will shift its focus to near-term goals, such as layer-1 scaling and layer-2 scaling support.<\/p>\n Some whales have taken advantage of Ethereum\u2019s cheaper price tag. On April 23, Lookonchain identified<\/a> two wallets accumulating millions of dollars worth of ETH. The blockchain monitor identified another wallet<\/a> on April 22 that has accumulated over $100 million in ETH since Feb. 15. Ether is currently down from the plus-$4,000 it reached in December<\/a> but rose over 10% on April 23 to over $1,800<\/a>.\u00a0<\/p>\n In a recent client letter, Standard Chartered Bank slashed its 2025 price estimate for Ether from $10,000. However, for whales accumulating at current levels, upside potential remains, as the bank still predicts a year-end target of $4,000.<\/p>\n Geoff Kendrick, the bank\u2019s head of digital assets research, attributed the more cautious outlook<\/a> to Ethereum\u2019s structural decline, noting that the layer-2 networks designed to improve scalability are now extracting much of the fee revenue once captured by the base layer.<\/p>\nEthereum gets dumped by institutions, but for how long?<\/h2>\n
Ethereum returns to net inflationary state<\/h2>\n
Buterin\u2019s radical RISC-V proposal for Ethereum<\/h2>\n
Could Ethereum be the one that got away?<\/h2>\n