Odaily Planet Daily reports that Wintermute stated that this week’s cryptocurrency decline was primarily driven by macroeconomic factors rather than asset-specific ones. The weekend drop absorbed the initial wave of geopolitical panic, while the rebound stemmed from the market’s view that Bitcoin, having fallen 45% from its all-time high, had largely priced in most negative factors. However, the impact of energy factors has been underestimated. Persistently high oil prices could keep inflation elevated, countering central banks’ desire to cool inflation and potentially further delaying U.S. interest rate cuts. Cryptocurrencies are at a disadvantage in this dynamic.
Late last week, ETF fund flows reversed, with net inflows exceeding $1 billion, ending five consecutive weeks of outflows. Although net outflows for the year to date remain substantial at approximately $4.5 billion, long-term holders appear to have maintained their positions, with most recent selling linked to speculative holdings rather than institutional exits.
Compared to current trading conditions, institutional participation is significantly lower than during the $85,000 to $95,000 trading range from November last year to September this year. At that time, institutional trading was more active, especially during price declines. Now, at current levels, buying pressure is clearly insufficient, leaving the market highly vulnerable.