Crypto Assets Market Recent Pullback Analysis

Recently, the Crypto Assets market has experienced significant adjustments. This article will analyze the main influencing factors of the current market trends from both micro and macro perspectives.

Micro Level: Continuous Occurrence of Large Capital Loss Events

Recently, the theft incidents involving a certain trading platform and a certain DeFi project have raised concerns in the market. These two significant capital losses have put considerable pressure on the operations and expansion of the related companies. Although investors in the Crypto Assets circle have become accustomed to high risks, these events have clearly shaken the confidence of traditional funds. From the flow of BTC ETF funds, it can be seen that there has been a large outflow of funds since the attack incident, reflecting the negative sentiment of traditional investors. These security incidents have become the trigger for this round of pullback at a micro level.

Macroeconomic Level: Great Power Competition and Liquidity Migration

From a macro perspective, the current market is influenced by the following aspects:

1. The issue of the U.S. fiscal deficit
2. Risk of Stagflation in the United States
3. Dollar Trend

fiscal deficit issue

The U.S. government is working to improve its fiscal situation by cutting spending, laying off employees, and other measures. However, overly aggressive policies may raise concerns about an economic recession, necessitating close attention to the pace of related policy advancements and their impact on employment, GDP, and other indicators.

Stagnation Risk

Recently, the results of the DeepSeek open source week have had a certain impact on the American AI industry, which may affect the valuations of related companies. At the same time, there has been a regression in the valuations of Chinese tech stocks, and changes in capital flows have been observed. Additionally, attention should be paid to the progress of the establishment of the US sovereign fund and its potential impact on the market.

Dollar trend

The trend of the US dollar is uncertain. A strong dollar benefits US bonds and global enterprises, but is detrimental to domestic industrialization. A weak dollar has the opposite effect. Considering policy objectives, the dollar may exhibit a trend of being strong first and then weak.

Conclusion

Currently, there are many uncertainties in the market. Investors may consider adopting a barbell strategy, on one hand allocating to blue-chip Crypto Assets or participating in low-risk DeFi projects, and on the other hand, taking small positions in high-volatility assets. Although there is some price pressure in the short term, no obvious structural risks have emerged. If there is an excessive pullback, appropriate positions can be built.