In 2026, the new year begins with Ethereum once again becoming the market focus. The price breaks through $3185, with a gain of over 50% in one month.

The market immediately splits—some loudly proclaim that the bull market has just begun, while others are firmly watching for a bull trap. As someone who has been navigating the crypto world for many years, I will analyze what is really behind this wave of price increase.

**Interest rate cut signals open the floodgates**

The Federal Reserve signaled in December last year that there might be three rate cuts in 2026. Simply put: funds are starting to shift from safe assets to higher-risk, higher-return investments. Expectations of rate cuts directly pushed down the US dollar index, breaking below 102 and hitting a new low since August last year.

History shows that in a low-interest-rate environment, risk assets like cryptocurrencies tend to perform well. The total global crypto market cap has surpassed $2.5 trillion, a 40% increase from last year's lows. The numbers are right here.

**But there's a trap here**

The market often plays a game: buy the expectations, sell the facts.

Once the January US CPI data disappoints—coming in higher than expected—expectations of rate cuts may be postponed, the dollar immediately rebounds, and cryptocurrency prices will take a hit. Moreover, the Fed’s pace of rate cuts is inherently uncertain. The President of the Cleveland Fed has previously hinted that the neutral interest rate might be higher than the market thinks.

So, although the macro outlook seems favorable, this is also the most dangerous time. We need to stay alert to shifts in market sentiment.