This weekend, Ethereum's price experienced severe fluctuations within a narrow range, seemingly building a bottom but actually hiding dangers. From a market structure perspective, this is not a simple sideways consolidation but rather the final tug-of-war between bulls and bears—a precursor to triggering a downward cascading effect. If the macro environment and market sentiment do not show significant improvement, Ethereum may face a systemic confidence collapse next week, heading towards an extreme bear market scenario characterized by dual kills from technical and fundamental factors.

Reversal of interest rate cut expectations: From 'dream' to 'reality slap'

Once seen as a lifeline for the crypto market, the expectation of 'interest rate cuts' is now gradually disillusioning. The latest consumer price index (CPI) and producer price index (PPI) released by the US both exceeded market expectations, highlighting that core inflation remains entrenched. Federal Reserve officials' hawkish remarks are frequent, and the market's bets on interest rate cuts within the year have rapidly cooled, even beginning to discuss whether further rate hikes are necessary.

For the crypto market, the collapse of interest rate cut expectations means that the cost of capital will remain high for a long time, intensifying the market's risk-averse sentiment towards risk assets. Ethereum, as the main platform for risk applications like DeFi and NFTs, will face increasing liquidity pressure.

Strong dollar and capital outflow: The 'headwind' for the crypto market

Against the backdrop of delayed interest rate cuts, the US dollar index (DXY) has recently surged again, corresponding to a massive withdrawal of funds from emerging markets and risk assets. According to on-chain data, Ethereum's trading activity this week has declined, stablecoin inflows have shrunk, and some institutional wallets have shown signs of large asset outflows. The cooling of funds means that the market's support is rapidly eroding; when buying cannot absorb selling pressure, a decline is just a matter of time.

War and geopolitics: Black swans are no longer 'accidental'

The situation in the Middle East remains unsettled, with conflicts along the Israel-Lebanon border escalating, and the proxy struggle between the United States and Iran continuing to heat up. Meanwhile, there are no signs of relief in the Russia-Ukraine war, and Russia has recently launched a new round of pressure on European energy supplies. As the war evolves from a regional conflict to a global resource struggle, cryptocurrencies, as high-volatility instruments, naturally become the 'object of abandonment' for risk-averse funds.

Tariffs and the US-China game: The global economy risks falling back into fragmentation

In mid-May, the United States announced new tariffs on Chinese electric vehicles, batteries, and chips, clearly marking a deepening of the new Cold War era. China may retaliate with countermeasures, including restricting rare earth exports and strengthening controls on technology products, potentially further damaging global supply chains and financial stability. As an asset with high participation in Asia, Ethereum's ecosystem is bound to be impacted indirectly. User activity, miner resources, and trading depth may all be affected by geopolitical chain reactions.

Technical and emotional double kill: Death cross forming

From a technical perspective, Ethereum has tested the major support area multiple times, with short-term and long-term moving averages forming a typical 'death cross' pattern. Accompanied by a decline in on-chain active addresses and a shift to panic in the market sentiment index, the crypto community's 'faith support' is crumbling. The narrative that previously supported prices has been replaced by macro fears and cash demand. If the bearish trend continues, stop-loss orders and leveraged liquidations could trigger accelerated selling.

Don't be misled by the weekend's sideways illusion! Ethereum is at the center of a vortex intertwined with multiple negative factors. The hopelessness of interest rate cuts, a strong dollar, escalating war risks, and the US-China trade confrontation are gradually undermining the foundation of market confidence. If there are no significant turning signals next week, the script for an extreme bear market will draw closer to reality: it is not a question of 'how much it will drop,' but rather 'who is still in the game.'