On May 23, the cryptocurrency market experienced a fierce sell-off, triggered by a shocking policy announcement: US President Trump announced that starting June 1, he would impose a new round of punitive tariffs on cars, high-tech equipment, and green energy products imported from the European Union. This sparked a new wave of global trade tensions, coupled with rising risk aversion and deteriorating technicals, causing Ethereum to plunge more than 300 points that day, potentially heading towards the bear market abyss below 2,000.
Trump's policies shift towards a hawkish stance, leading to a comprehensive rise in global capital risk.
The scope and scale of the tariffs imposed by the Trump administration far exceed market expectations, representing a formal return to a hardline strategy in the US trade war. The EU immediately stated it would retaliate in kind, and expectations for international supply chains and capital flows will face severe disruptions.
In such an environment, the capital market quickly adjusts its risk exposure, with funding support for high-volatility assets like cryptocurrencies significantly decreasing. As the core asset of the Web3 ecosystem, Ethereum's value is highly dependent on global capital flows and the funding pool for technological innovation, making it the first to be impacted in the wave of global fragmentation.
The dollar strengthens, bonds soar, and risk assets face an outflow effect.
Trump's policies deepen global economic uncertainty, with market risk-averse funds flowing into US Treasuries and the dollar, causing the US Dollar Index (DXY) to return to high levels. At the same time, the yield on 10-year US Treasuries has significantly retreated, indicating that institutional funds are accelerating their exit from risky asset markets.
This directly poses dual pressure on the cryptocurrency market: on one hand, funds are withdrawing from DeFi platforms, reducing the intrinsic demand for Ethereum; on the other hand, the circulation of stablecoins is starting to decline, leading to a shrinkage in on-chain trading activity, reflecting a rapid loss of market confidence in the future.
Technical deterioration initiates a liquidation storm with the 'head and shoulders' pattern.
A typical 'head and shoulders' reversal pattern has formed on Ethereum's technical chart, with the sharp drop on May 23 officially breaking the neckline, confirming a mid-term bearish pattern. On-chain data shows that a large number of leveraged long positions in the 2300–2400 range have been liquidated, and the derivatives market has also seen a rapid decline in open interest, indicating that bullish capital is retreating quickly.
If the price further breaks below key psychological support, going below 2,000 will no longer just be an emotional expectation, but may become a reasonable target for the next phase of capital adjustment.
Political uncertainty further escalates, and the cryptocurrency market finds itself again under 'regulatory pressure'.
During Trump's presidency, there was a contradictory attitude towards cryptocurrency assets. Recently, there have been reports that the White House is preparing to launch a 'restart of regulatory framework review' regarding stablecoins and decentralized finance. The market is concerned that if the European trade war triggers broader cross-border financial regulatory coordination, the cryptocurrency market may be affected, reintroducing the policy risk shadow of 2022.
Bear markets are not panic; they reflect the reality of Trump reopening the trade war, which not only impacts global supply chains but also reshapes the risk assessment framework of the capital market. In such a situation, Ethereum's value support is no longer just about blockchain innovation or user activity, but rather a 'resilience test' of whether it can withstand external political and economic pressures. Falling below 2,000 is not an excessive market panic but a rational response to fundamental changes.