The recent market pullback wasn't due to panic, but rather repositioning. Many investors were overly optimistic before the Fed meeting, leading to an "immediate forecast" reaction where the anticipated 25-basis-point cut was already priced in. While stocks quickly stabilized, cryptocurrency markets failed to recover. Bitcoin and Ethereum remain trapped in a narrow range, fluctuating around $107,000 and $3,700, respectively. In contrast, traditional assets rebounded more rapidly.
Altcoins were the hardest hit. The GMCI-30 index fell 12% last week. Video game tokens plummeted 21%, Layer 2 projects 19%, and meme-based tokens 18%. Mid- and small-cap assets declined by approximately 15% to 16%. Only the AI (-3%) and DePIN (-4%) sectors held up, thanks to the strength of tokens like TAO. Wintermute noted that these movements appeared to be "driven by flows rather than fundamentals," reflecting a liquidity unwinding following the FOMC meetin
The Liquidity Shorta
Global liquidity is increasing thanks to the easing of central bank monetary policies amid sustained growth. Yet, these funds are not flowing into cryptocurrency markets. The supply of stablecoins has surged by more than 50% this year, adding approximately $100 billion. However, inflows into Bitcoin ETFs are stagnating, with total assets under management remaining stuck at $150 billion. Furthermore, digital asset tokenization (DAT) activity has collapsed, with secondary volumes on major exchanges like the Nasdaq plummetin
Despite weak inflows, the cryptocurrency market structure remains robust. Leverage has been reduced, volatility is under control, and overall positioning appears optimal. Wintermute emphasized, "Liquidity has yet to reach the cryptocurrency market." They added that monitoring ETF and DAT flows will be crucial for detecting a market rebound. The traditional four-year cryptocurrency cycle has become obsolete, replaced by performance trends driven by liquidity
