According to an article by Wintermute published on Odaily Odaily, this week's cryptocurrency decline was driven more by macroeconomic factors than by factors specific to any particular coin. The weekend's drop absorbed the first wave of geopolitical panic, while the rebound stemmed from the market's perception that Bitcoin had already fallen 45% from its all-time high, with most of the negative news already priced in. However, the impact of energy factors has been underestimated. Persistently high oil prices could keep inflation high, and central banks around the world, hoping to curb inflation, could further delay US interest rate cuts. Cryptocurrencies are at a disadvantage in this game.
Late last week, ETF flows reversed, with net inflows exceeding $1 billion, ending five consecutive weeks of outflows. While year-to-date outflows remain around $4.5 billion, long-term holders appear to be holding relatively small positions, and much of the recent sell-off is attributed to speculative holdings rather than institutional investor exits.
Based on current trading activity, institutional participation is significantly lower than the $85,000 to $95,000 trading range between November of last year and September of this year. At that time, institutional trading was much more active, especially when prices were falling. Now, at current price levels, buying interest is clearly insufficient. The market appears quite fragile.
