Ethereum (ETH) is the world’s second largest cryptocurrency and is currently experiencing one of the most challenging times since the 2022 bear cycle. ETH fell more than 60% after reaching a local peak of nearly $3,900 earlier this year and is now trading around $1,400–1,600.
This decline is more pronounced than Bitcoin and other major alternatives such as Solana and BNB, which simultaneously loses 30-40% of its value.
Macroeconomic and basic factors affecting ETH price
Macroeconomic factors
In the short term, the overall sentiment of the broader financial markets (stocks, forex, commodities) has had a significant impact on the cryptocurrency market. Ethereum is often classified as a risky asset, so ETH tends to drop when investors take a “risk” stance.
ETH has dropped by about 8% over the past 24 hours, trading around $1,600. This downward trend is the pressure of macroeconomic headwinds throughout the cryptocurrency market and the risk is greater among investors.
ETH price – Source: Coingecko
According to Citi Research’s analysis, volatility in the U.S. stock market remains the most influential macro factor for digital assets such as Bitcoin and Ethereum, and the impact of US dollar strength is gradually disappearing.
Other macro variables, such as global trade dynamics and geopolitical tensions, also indirectly affect Ethereum. For example, the ongoing U.S.-China trade tensions or retaliatory tariffs could hinder global economic growth, delay stocks and make investors more cautious about crypto assets.
In addition, with the expected growth of on-site ETFs, many institutions have begun to accumulate ETH as a generation-generated asset.
However, this capital inflow is largely passive and contributes little to transaction volume or actual network usage. This creates a dynamic of “growing ownership but increasingly falling interactions” compared to smaller, more active assets, such as SOL or emerging meme coins, making ETH appear less agile, especially in the eyes of speculative traders.
Basic factors
The merger in September 2022 marks a major turning point in the transformation of Ethereum into a validation (POS) consensus mechanism. This shift reduces new ETH issuance by 90% and reduces energy consumption by 99%. It laid the foundation for Ethereum’s long-term “deflation” narrative, positioning ETH as an increasingly scarce asset.
However, with the Dencun upgrade (EIP-4844), this upgrade significantly reduces gas costs on the Ethereum network. The amount of ETH burned every day is greatly reduced. As a result, once the key factors supporting ETH price are supported, the deflationary narrative loses some short-term appeal. In fact, ETH has returned to a “moderate inflation” state. According to Ultrasound.Money, ETH’s net issuance rate rose to about +0.28% per year at the beginning of 2025, while negative issuances in 2023 were negative.
ETH Supply Rate – Source: Ultrasonic
Additionally, the fixed ETH volume has steadily increased due to Ethereum’s activation of smoking cessation (crumb upgrade), which has recently exceeded 40 million ETH, accounting for more than 33% of the total supply. However, this growth also brings the risk of regular technical sales pressure.
According to Nansen, in the weak market stage, many validators choose to cancel profits and lock in profits, especially those trading between $1,000 and $1,500 on ETH.
ETH price forecast
Short-term prospects
In the short term (in the next few weeks to a month), macroeconomic factors and overall market sentiment may continue to drive ETH prices. If there are clear signals that the Fed will cut tax rates, or weaken the Fed’s weakening of its policy stance, these factors may drive higher prices for ETH. Crypto markets may see “relief rally” and increase liquidity increases ETH prices.
In addition to the Federal Reserve, the performance of U.S. stock markets and other risky assets remains a key indicator of ETH in the short term. If major indexes like the S&P 500 and the Nasdaq are sharply correct, ETH may also face widespread sales pressure.
Currently, ETH has entered a long-term support zone between $1,400 and $1,500. If financial markets continue to weaken (with further declines in the Nasdaq and S&P 500), ETH can retest the $1,200 level, a price not seen since June 2023.
Conversely, if the Fed announces a clear roadmap and the Ethereum field ETF is approved by regulators (even in principle), ETH may see a $1,800-$2,000 technical rebound.
Overall, ETH price forecasts remain highly uncertain in the short term and are very sensitive to real-time news and macro developments.
Medium-term prospects
In the medium term, the price outlook for ETH depends largely on the global macroeconomic environment and the potential recovery of institutional capital after a period of risk sentiment. Although the Ethereum Spot ETF received SEC approval in mid-2024, the positive results of market performance were not as expected.
After a brief price surge after approval, ETH quickly lost momentum and continued to tie in the wider market, suggesting that institutional inflows have not yet returned in a meaningful and sustainable way.
In this case, macroeconomic conditions will be the key factor. If the Fed cuts tax rates by the end of 2025 and geopolitical risks do not escalate, ETH could benefit from a more favorable liquidity environment.
On the other hand, if compared to an alternative platform like Solana, if the global economy enters a recession, or investors begin to lose confidence in Ethereum’s competitiveness, ETH may continue to trade below the $1,500 level for several months.
Additionally, some analysts believe that if institutional capital reenters, on-chain activity resumes, and upcoming upgrades to Ethereum, ETH’s range could be between $2,200 and $3,200, potentially returning the $3,500-$5,000 range.
in conclusion
Ethereum is currently undergoing in-depth corrections and there is no obvious short-term recovery momentum. Despite launching the ETF, ETH continues to decline due to macroeconomic headwinds, widespread risk-taking sentiment, and narrative decline appeal such as deflation supply and Ethereum’s leadership in Defi.
However, Ethereum’s technological foundation remains solid and is backed by a clear roadmap for growth in Tier 2 solutions and an upcoming upgrade. In the medium term, if macro conditions are stable and institutional capital returns, ETH can be restored to the $2,200-$3,500 range.
At present, ETH is no longer the choice for investors seeking fast returns, it has become a test of patience and long-term belief.
