Ethereum in the "burning zone": When monetary easing meets limited ETH supply

The decline from November 10th shook the cryptocurrency market, but deep structural changes are happening beneath the surface. Ethereum, currently valued at $3.11K with a 24-hour change of -0.17%, is at the center of a transformation that combines traditional finance with blockchain in a way that Washington and Wall Street elites can accept.

Capital Architecture: How US Treasury Bonds Drive the Crypto Ecosystem

In December, Paul Atkins, Chairman of the SEC, made a surprising statement at the New York Stock Exchange: the entire American financial infrastructure could potentially be migrated to blockchain within a few years. This is not rhetoric – it’s an admission that tokenization is becoming irreversible.

Beneath the surface, the Trump family, Wall Street, and government institutions are building a new capital network based on a clear value chain:

US Treasury Bonds ( issued and managed by the Treasury ) are the foundation for everything. Druckenmiller, Tiger Cubs, and others use them as a low-risk basis for interest rates, while they also serve as reserves for stablecoins (USDT, USDC, and similar ).

Stablecoins – mainly maintained through short-term US Treasury bonds and bank deposits – fund the next layer.

RWA (Real World Assets) – from Treasury bonds and mortgages to receivables – are tokenized on Ethereum L1 and L2 layers. This is a fusion of traditional financial assets with blockchain.

Ethereum and its L2 ecosystem represent the ultimate anchoring of this capital flow. ETH/TVL RWA has reached $12.4 billion, accounting for 64.5% of the total RWA value across all blockchains.

Importantly: while other blockchains declined after November 10th, Ethereum quickly rebounded. This is no coincidence – it’s the result of major capital players favoring Ethereum.

Fusaka: Ethereum Changes the Game in Value Capture

The recent Fusaka upgrade flew under the mainstream media radar but marks a turning point in ETH economics. It’s not just about scaling – it’s about solving a long-standing problem for Ethereum: how the main L1 network participates in fee flows generated by booming L2s?

For years, rollups (L2) could practically use Ethereum’s blob space for free. Fusaka changes this by introducing blob base fee – a dynamic minimum price linked to L1 fee levels. Now, each blob must pay at least about 1/16 of the base fee on L1.

The result? ETH is burned. On the last day, (November 12th at 23:00), blob fees were 5696 times higher than before the upgrade, and over 24 hours, 1527 ETH were burned, representing 98% of the network’s total burn.

This is not just a number – it’s a mechanism that makes ETH deflationary during periods of high L2 activity. The more transactions on L2, the more ETH is burned, and every ETH holder participates in this process.

Market on the Edge: Limited ETH Supply and the “Squeeze” Opportunity

Speculative leverage in the crypto markets has fallen to a historically low level of 4%. On November 10th, all ETH futures positions were liquidated, and capital fled the market.

But look at it from another perspective: there are only 13 million ETH on exchanges – just 10% of the total supply. This is one of the lowest levels in history.

The traditional Long BTC/Short ETH strategy, which worked perfectly in previous bear markets, has not performed this time. The ETH/BTC ratio has been trending sideways since November. In extreme panic conditions, when the broader market reacts to news, this kind of misalignment could trigger a “short squeeze” – where those who shorted ETH are forced to buy back at much higher prices.

Politics, Capital, and Timing

Entering 2025–2026, both the US and China signal easing:

• The US will cut taxes, lower interest rates, and relax crypto regulations
• China will cautiously ease policies and stabilize financial sectors

This creates an ideal environment for capital flows into the crypto ecosystem – but only if volatility is limited and investors regain confidence.

Conclusion: ETH in an Offensive Position

Ethereum is at a dangerously interesting moment. The capital structure favors ETH, (Fusaka) technology enhances value capture, and market conditions (limited supply, no leverage, eased policies) create an asynchronous dynamic between what Wall Street knows and what the broader market perceives.

For those who saw the recent wipeout as a disaster: Ethereum did not lose its fundamentals. It lost speculators. Now, in relatively mild conditions, with weaker sentiment but stronger fundamentals, ETH remains in a “strike zone” for those patient enough to wait.