The current international situation is complex and ever-changing, as multiple geopolitical and macroeconomic risks intertwine, the market's risk appetite is quietly shifting, posing an undeniable structural challenge to Ethereum, the backbone of the crypto asset market.
Although there are currently no clear signs of a sell-off in the market, from the perspective of funding momentum, the macro environment, and the repricing of safe-haven assets, investors should adopt a cautious wait-and-see attitude regarding Ethereum's performance in the coming weeks. Here are several recent hotspots.
Political risk is escalating: the Middle East and Eastern Europe are pressure points.
The proxy conflict between Israel and Iran has further escalated, and recent reports indicate that negotiations on the US-Iran nuclear agreement have once again broken down, leading to heightened tensions in the overall Middle East situation. The US government has issued evacuation orders for diplomatic personnel and military units in the region, reflecting not only the failure of diplomatic efforts but also seen as a prelude to the potential escalation of military conflict. Under high geopolitical uncertainty, global demand for safe havens continues to rise, with market funds preferring to flow into the US dollar and short-term bonds rather than high-risk assets like cryptocurrencies.
In addition, the Russia-Ukraine war has entered a new escalation phase. The Russian military has recently expanded its offensive in Kharkiv and Donetsk, while the pace of military aid from the US and Europe to Ukraine remains slow, leading to heightened market expectations for the prolongation of the conflict. The spillover effects brought about by the expansion of geopolitical risks, in addition to price fluctuations in energy and food supply chains, further prompt institutional investors to adjust their positions and reduce exposure to non-core assets.
Internal pressures are accumulating in the United States: California unrest and the shadow of federal debt.
In the continental United States, social stability is facing unprecedented challenges. Los Angeles has recently declared a state of emergency and implemented a nighttime curfew due to escalating social conflicts. According to local sources, several commercial areas and financial institutions in the downtown area have suffered damage, disrupting business operations and infrastructure safety, which directly impacts local crypto venture capital activities. Over the past few years, California has been a hub for blockchain and Web3 startups. Now, with social order out of control, there will be heavy pressure on investor sentiment.
What is more severe is that the US federal government's debt issue has resurfaced. Congress has yet to reach an agreement on a new round of the debt ceiling, and credit rating agencies have issued warnings, leading to a significant increase in market pricing for the risk of US debt default. If a technical default occurs, even if only a short-term event, it could trigger deleveraging behavior among global financial institutions, accelerating downward pressure on risk assets. As an asset class with a strong dependence on liquidity, Ethereum is bound to be affected.
Tariff policies and global liquidity: signs of policy tightening are emerging.
The market is also starting to digest the US government's upcoming tariff policies. In light of presidential election pressures and domestic industry protection needs, the Biden administration plans to impose a new round of tariffs on imports from China and certain Southeast Asian countries. This could not only lead to renewed disruptions in global supply chains but also increase the costs of consumer electronics and server hardware, indirectly pressuring blockchain systems that rely on infrastructure and high-frequency trading. More importantly, if inflation rebounds again, the Federal Reserve may have to pause its easing policies, further cooling market expectations for loose liquidity.
For Ethereum, this means a dual blow of "increased transaction costs and construction costs" and "weakened funding momentum." Especially at a time when Layer 2 solutions have not yet been widely adopted and demand on the application side is still in a correction phase, Ethereum's fundamentals are facing multiple pressures from both internal and external sources.
Investors need to pay attention to structural risks beyond short-term volatility. Despite the absence of obvious panic selling signals in the market, signals such as weak institutional funding momentum, continuous declines in total DeFi locked value, and slowed on-chain activity indicate that Ethereum faces not just a singular technical adjustment in the short term, but rather structural adjustment pressures under simultaneous macro and geopolitical risks.
For medium to long-term holders, this is a critical risk reassessment period. Although many investors remain optimistic about Ethereum's long-term prospects, under the current conditions where the global capital market has not yet shaken off turmoil and policy uncertainty, carefully managing positions, avoiding excessive leverage, and paying attention to on-chain indicator trends will be the core strategy for protecting capital at this stage.
