Ethereum News This Week — ChangeHero Digest

The crypto market is having its worst start to a year since the collapse of FTX, and the pain is touching everything from Bitcoin mining rewards to Ethereum's governance structure. Over the past 30 days, total crypto market capitalization has shed nearly $1 trillion, with CoinGecko labeling sentiment as "extreme fear." Bitcoin is down about 30% for the month, and Ethereum isn't faring much better. The interesting part? The macro backdrop is getting messier by the day, and traditional markets are starting to crack at the same time. Meanwhile, Ethereum's development community is making moves that could reshape the network's future, even as prices tumble.

Bitcoin's Freefall and the Fed Factor

Bitcoin fell below $65,000 this week, according to Yahoo Finance, marking 16-month lows and erasing all gains since Donald Trump took office. The cryptocurrency hit an all-time high of $122,200 in October, as the BBC reports, but has since collapsed about 24% year-to-date. The weekly decline alone was nearly 16%, with another $2 billion in liquidations washing through the market.

What's driving the sell-off? Deutsche Bank points directly to Trump's nomination of Kevin Warsh as the next Federal Reserve chair. DL News notes that this pick spooked both crypto and stock investors, triggering a cascade of risk-off behavior. The fear is that Warsh could take a more hawkish stance on inflation, which would keep interest rates higher for longer and continue to drain liquidity from speculative assets like crypto.

On the fundamentals side, things look shaky too. JPMorgan estimates Bitcoin's production cost at about $87,000, meaning BTC is now trading well below the breakeven threshold for miners. That's a problem, especially with the next halving event forecasted for mid-2028, when miner rewards will drop from 3.125 BTC per block to roughly 1.56 BTC. If prices don't recover, we could see capitulation among smaller mining operations.

How low could it go? Stifel warned that Bitcoin could fall as low as $38,000, while former Bloomberg Intelligence senior commodity strategist Mike McGlone predicted on Feb. 1 that Bitcoin could crash to $10,000 in a scenario resembling the 2008 financial crisis. That might sound extreme, but the current price action is starting to validate some of the bearish scenarios.

The Institutional Exodus Accelerates

Institutional investors are heading for the exits. U.S.-listed spot Bitcoin ETFs recorded more than $3 billion in outflows last month, following about $2 billion in December and $7 billion in November, according to Bitcoin Magazine. That's a consistent pattern of capital flight over multiple months, not just a one-off panic event.

At the same time, Senate Judiciary Committee Democrats said Trump has amassed crypto holdings worth more than $11 billion and gained $800 million in personal income from crypto transactions since taking office. The optics are awkward. On one hand, Trump issued an executive order in January 2025 aimed at making the U.S. the "crypto capital of the planet," as the BBC reports. On the other hand, during his current administration, a DOJ team focused on crypto regulation enforcement was dissolved, and the SEC dropped crypto-related enforcement work and investigations.

The disconnect between Trump's pro-crypto rhetoric and the market's brutal reality is stark. Investors expected deregulation to trigger a sustained rally, but instead, macro headwinds have overwhelmed any regulatory tailwinds.

The Gold Comparison: A Rare Bright Spot

Here's the surprising counterpoint: Bitcoin's risk profile relative to gold is actually improving. JPMorgan noted that Bitcoin's volatility relative to gold has fallen to a record low, with the bitcoin-to-gold volatility ratio near 1.5. Gold's volatility has been rising, partly due to geopolitical instability and central bank demand, while Bitcoin's volatility has been compressing.

That doesn't mean Bitcoin is safe yet—it just means the gap between Bitcoin and gold as a "store of value" is narrowing. For long-term holders, this is one of the few data points suggesting that Bitcoin is maturing as an asset class, even if the current drawdown is painful.

Ethereum's Leadership Shuffle and Post-Quantum Pivot

While prices were collapsing, Ethereum's development community was undergoing a structural transformation. In November 2024, Ethereum developer Danny Ryan proposed reshaping Ethereum Foundation leadership and said he would consider leading as executive director, according to The Guardian. By March 1, 2025, the Ethereum Foundation appointed two co-executive directors: Tomasz Stańczak and Hsiao-Wei Wang.

Then, in February 2025, Danny Ryan announced he was co-founding Etherealize, an EF-aligned organization focused on Ethereum products for traditional financial institutions. The move suggests a strategic shift toward bridging Ethereum's tech with legacy finance, a recognition that institutional adoption will require specialized infrastructure and compliance layers.

On the technical side, the Ethereum Foundation elevated post-quantum security to a strategic priority and created a dedicated Post-Quantum team led by Thomas Coratger, as CoinDesk reports. The foundation is building "leanVM," intended to combine many post-quantum approvals into a single proof to avoid overwhelming the blockchain. Test networks are already running with post-quantum signatures.

Why does this matter? Quantum computing is no longer a distant threat. Coinbase formed an independent quantum advisory board, and Optimism published a 10-year roadmap to transition its Superchain stack toward post-quantum cryptography. The fact that these organizations are treating quantum resistance as a near-term priority signals that the industry is taking the threat seriously.

Vitalik's "Rollup-Centric" Vision Is Dead

In a significant strategic pivot, Vitalik Buterin said on Feb. 3 that the industry's previous "rollup-centric" vision no longer makes sense, according to CryptoSlate. His reasoning: faster Ethereum Layer-1 scaling and slow decentralization among major rollups have changed the calculus.

The backdrop here is that Base, Coinbase's Layer-2 rollup, secured more than $11 billion in TVL and generated more than $75 million in revenue in 2025, about 60% of the Layer-2 sector's revenue that year, CryptoSlate reports. Base is essentially a corporate-controlled chain, and Vitalik's comments suggest frustration with the slow progress toward decentralization.

On the technical side, Ethereum's second Blob Parameters Only hard fork raised the maximum blob limit to 21 and the target to 14 per block, as noted by CryptoSlate, lowering transaction costs for Layer-2 rollups. Despite this, L2BEAT data shows that Base paid only about $1.52 million to Ethereum over the last year to post transaction data and cover settlement overhead. That's a tiny fraction of the $75 million Base generated, which raises questions about the economic alignment between Layer-2s and the Ethereum mainnet.

Separately, Certora received an Ethereum Foundation research grant to verify the correctness of "autoprecompiles," a ZK computation optimization developed by Powdr Labs for the EF's zkEVM initiative. The focus on zero-knowledge proofs signals that Ethereum's long-term scaling path will lean heavily on cryptographic compression, not just rollup outsourcing.

Tom Lee's Wild Ethereum Call and Bitmine's Big Bet

While the market was in freefall, Tom Lee doubled down on Ethereum. Yahoo Finance reports that Fundstrat's technical advisor sees Bitcoin near $77,000 and Ethereum around $2,400 aligning in price and time, which often signals a market bottom. Lee went even further, forecasting that Ethereum could rise 8,000% to $250,000 per token, according to DL News.

Is that realistic? Probably not in the near term, but the logic behind the call is worth unpacking. Bitmine bought $1.4 billion more Ethereum in recent weeks, DL News notes, bringing its ETH holdings to over $12 billion. Bitmine now owns over 3.4% of Ethereum's circulating supply and is aiming to reach 5%. That level of institutional accumulation during a drawdown is unusual and suggests that some large players see this as a generational buying opportunity.

For context, BlackRock's spot bitcoin ETF (IBIT) held about 770,791.55 BTC as of Dec. 31, 2025 (about $67.49 billion), with 100% of the portfolio in bitcoin. The fact that BlackRock is sitting on such a massive Bitcoin position while Bitmine is aggressively accumulating Ethereum suggests that institutional capital is making differentiated bets within crypto, not just exiting the space entirely.

Broader Market Contagion and Macro Warning Signs

The crypto selloff isn't happening in isolation. On Thursday, the Nasdaq fell 1.6%, the S&P 500 fell 1.2%, and the Dow fell about 1.2% (nearly 600 points), according to Investopedia. Fresh labor market data is starting to crack. Initial jobless claims were 231,000 for the week ending Jan. 31 versus economists' 212,000 estimate, and Challenger, Gray & Christmas reported more than 108,000 announced layoffs in January, the highest January level since 2009.

The tech sector's capex explosion is also raising eyebrows. Amazon expects to invest about $200 billion in capital expenditures in 2026, up from a planned $125 billion in 2025. Alphabet guided 2026 capital expenditures of $175 billion to $185 billion, roughly double its 2025 level. Amazon's Q1 operating income forecast of $16.5 billion to $21.5 billion missed analysts' $22.2 billion expectation, and Amazon shares fell more than 9.5% in premarket trade after the disclosure.

The pattern is clear: companies are pouring capital into AI infrastructure while short-term profitability is taking a hit. That's not inherently bearish, but it does mean that equity valuations are being repriced in real time, and risk assets across the board are feeling the pressure.

The Bottom Line

The crypto market is in the middle of a macro-driven correction, and the next few months will determine whether this is a healthy reset or the beginning of a multi-year bear market. Bitcoin's drop below production cost and the sustained institutional outflows from spot ETFs are serious red flags. The Fed chair nomination is adding uncertainty at exactly the wrong time, and the labor market data is starting to show cracks that could force a policy pivot—but not soon enough to save risk assets in the near term.

On the Ethereum side, the leadership shuffle and post-quantum pivot are long-term positives, but they won't stop the bleeding in the short run. Vitalik's critique of the rollup-centric model is a wake-up call for Layer-2s that have been extracting value without adequately contributing back to Ethereum's economic security. The fact that Bitmine is aggressively accumulating ETH while prices are down suggests that at least some institutional players see value here, but that doesn't mean a floor is in place yet.

The key variable to watch is the Fed. If Warsh's appointment leads to a prolonged period of restrictive policy, crypto is going to struggle. If macro conditions ease or if crypto-specific catalysts (like clearer regulation or a resurgence in on-chain activity) emerge, we could see a sharp reversal. For now, the safest assumption is that volatility is here to stay, and anyone still in the market should be prepared for prices to test lower levels before any meaningful recovery takes hold.