Currently, investor sentiment in the crypto market is extremely depressed. Bitcoin is still at $90,000, but altcoins are falling as if there is no end. Industry tycoon Arthur Hayes posted on social media that many IBIT holders are hedge funds. They earn higher returns than short-term U.S. Treasuries by going long on ETFs and shorting CME futures. If the BTC price falls and the basis narrows, these funds will sell IBIT and cover CME futures. These funds are currently profitable. Considering that the basis is close to the U.S. Treasury yield, they will close their positions during the U.S. trading hours and realize their profits. Bitcoin is expected to fall to $70,000.
StarEx exchange analysts believe that the current crypto market is affected by the macro-financial performance of the United States. So has Bitcoin entered a bear market? What opportunities are there in the future?
Reasons for the crypto market’s decline:
1. US stocks are stagnant, Trump's policy uncertainty is increasing, monetary tightening, and ETF funds are on the sidelines
Driven by AI, after two years of sharp rise, the US stock market has experienced stagflation at a high level. Buffett's latest shareholder letter shows that he has sold stocks for nine consecutive quarters, holding cash of up to $334 billion, which exceeds his stock holdings, and is still continuing to reduce his holdings. Obviously, he is taking a defensive strategy. Historically, although Buffett's reduction of stocks will not be perfectly stuck at the highest point, it generally foreshadows the arrival of winter in the US stock market. Recently, Microsoft withdrew two data centers. Wall Street is worried that AI infrastructure may face the risk of oversupply. Coupled with the impact of China's deepseek, AI continues to lead the US stock market to rise sharply. There is limited room. Institutions have certain concerns about the US stock market. Cryptocurrency, as a risky asset, is the first to bear the brunt.
Trump claimed that tariffs on Canada and Mexico would continue, further dampening market confidence. The U.S. Bitcoin Strategic Reserve Act, which the crypto market has high hopes for Trump, has not made smooth progress recently. At the legislative meeting on February 24, the South Dakota House of Representatives Commerce and Energy Committee decided to postpone the HB 1202 bill to the '41st day' of this legislative session. However, the state legislative session is only 40 days at most, which is equivalent to vetoing the bill, meaning that the state will not include Bitcoin as an official investment option for the time being; on February 24, the Montana House of Representatives voted against a proposed bill on February 22, which had proposed Bitcoin as a state reserve asset. The bill was opposed by several Republican lawmakers, who believed that this would allow the State Investment Committee to over-speculate with taxpayer funds, which was too risky. The bill has been basically shelved, and if it is to be re-proposed in the future, it needs to be submitted to the legislature for review again.
The market's expectations for the US dollar rate cut have repeatedly failed, resulting in a continuous tightening of liquidity, which has restricted the entry of institutions from a funding perspective. For Bitcoin, the market cannot find a more favorable expectation than the US strategic reserve for the time being. Based on the above reasons, the Bitcoin ETF has continued to have a net outflow for nearly half a month, which has also directly led to the sluggish Bitcoin market.
2. More than 500,000 Ethereums were stolen, and hackers continued to sell them, further suppressing altcoins
As Bybit has lost more than 500,000 ETH, the market expected that ETH would be repurchased to replenish wallet funds and boost ETH's rebound. However, the rebound was relatively small. Currently, Bybit has completely made up for the ETH gap through loans and over-the-counter transactions, and market expectations have been met. From the on-chain data, hackers continue to launder the stolen $1.5 billion ETH, and the expected sell-off of hundreds of thousands of ETH further suppresses the price of Ethereum.
However, altcoins are still in a bear market trend with a large number, sluggish ecological progress, and continuous bloodsucking, and there is no sign of improvement in the short term.
3. The demise of meme coins has dealt a heavy blow to the SOL ecosystem, dampening retail investors’ enthusiasm
Over the past year, due to the craze of meme coins, retail investors have been enthusiastic. Trump and his wife issued coins to push meme coins to a climax. Then various celebrities followed suit, causing meme coins to collapse quickly. The trading volume plummeted by more than 80%. Pump even had a meme coin with a 1 million FDV graduated in 24 hours! Affected by this, the price of Solana fell below $140 to the lowest since October, and its ecological tokens such as RAY, JUP, JTO, etc. all experienced a large decline.
The dissipation of meme coins has dampened the enthusiasm of retail investors, and unless new ecological opportunities emerge, it may take a long time to repair.
How do you view the market outlook? StarEx Exchange analysts believe there are several strategies:
1. Judging from the continuous rise in gold prices, the market is substantially bearish on the U.S. dollar. Although this provides long-term support for Bitcoin, short-term capital outflows from the crypto market may indeed bring risks. A prudent strategy can wait for a leverage explosion event to occur. Entering the market when the market is in a bloodbath may bring greater returns. Arthur Hayes believes that Bitcoin may fall to $70,000. If this really happens, you can buy at the bottom.
2. Keep a close eye on the Fed’s policies. Currently, the Fed has not cut interest rates or loosened its monetary policy, which has suppressed the market. If the U.S. dollar’s monetary policy changes, the crypto market will also see a trend, especially when the market crash forces the Fed to start printing money.
