The crypto market is not short of money, and institutional funds are waiting for a definite signal

Cryptocurrency market continues to be sluggish: Institutional investors are deterred by short-term volatility and long-term uncertainty

The current cryptocurrency market continues to be sluggish. Analysts at the StarEx exchange believe that the main reason is that institutional investors are cautious about short-term market fluctuations and uncertain long-term prospects, and are reluctant to enter the market. Unlike Trump's first term as president, when he frequently " cheered up " the U.S. stock market , his mentions of the U.S. stock market have significantly decreased during his second term, replaced by various policy uncertainties, which has severely hit market confidence and caused a sharp drop in U.S. stocks.

The United States has been facing high debt and high inflation for several years. Since 2022, the Federal Reserve has used traditional interest rate hikes to curb inflation. Although inflation has fallen, the American people still feel the pressure of soaring prices and public discontent is boiling. The high interest rate policy has not only driven global funds to flow into the United States, further supporting inflation, but also led to a sharp increase in the US government's interest expenses. At present, the United States' annual interest expenses have exceeded 1 trillion US dollars, even exceeding military spending.

Trump, Musk and others are committed to reducing the US debt, and they are obviously dissatisfied with the Fed's high interest rate policy. High interest rates have not only failed to quickly reduce inflation, but have caused the debt to expand rapidly. Trump believes that the Fed's policy is ineffective, and he may hope to reduce interest rates by cooling the economy, thereby reducing debt pressure and curbing inflation.

Analysts at StarEx Exchange believe that the plunge in both the US stock market and the cryptocurrency market was triggered by Trump's tariff policy and trade war. The tariff policy not only directly impacted corporate profits, but also exacerbated global trade tensions. Coupled with the risk of a global economic downturn, market concerns about an economic recession have significantly increased.

Over the past two years, technology stocks and large-cap stocks have been the main engine of the rise of the US stock market , accumulating huge gains and valuations at historical highs. However, concerns about a recession have led to a correction in technology stock valuations and concentrated profit-taking, further dampening market confidence. Funds have flowed out of the stock market and turned to buying US bonds, pushing down US bond yields and achieving a substantial rate cut. Analysts at the StarEx exchange believe this may be what Trump wants to see.

Although Trump's series of policy actions have increased the risk of a US recession, the fundamentals of the US economy remain strong. If it were just the " recession expectations " brought about by policies , institutional investors might not be too worried. However, what they are really worried about is that policy mistakes will cause the economy to really fall into recession.

Therefore, institutional investors are currently facing the following situation: short-term market volatility is intensifying, and the long-term outlook is still unclear, which makes them completely afraid to enter the market. The risk of trade war may continue to ferment, and market panic will not subside quickly in the short term. US stocks may face further downside risks, and the Nasdaq index has entered the technical correction area, and the risk of a bear market is approaching. The cryptocurrency market is also difficult to remain immune, and the trend of volatility adjustment will continue in the short term.

Analysts at the StarEx exchange believe that Bitcoin is no longer a pure currency asset. Apart from it, other cryptocurrencies are weak, especially Ethereum. The crypto market is not short of money . The market value of stablecoins has reached 230 billion US dollars, even exceeding the market value of ETH , but funds choose to stay put. They are waiting for definite signals , including whether the macro-economic recession will occur, whether the Federal Reserve will print money and release water, and whether a new ecological narrative will emerge in the crypto market . Only when these signals appear will funds dare to flow back into the market and promote the recovery of cryptocurrencies.