📉 Reasons for the Current Decline in the Cryptocurrency Market
🔍 Overview
The cryptocurrency market is currently experiencing a period of decline and sharp fluctuations, due to a complex set of technical, economic, and regulatory factors. Below is a detailed analysis of the main reasons behind this decline, based on the latest available data and reports.
📊 Technical Factors and Technical Analysis
· Breaching Critical Support Levels: On March 28, 2025, Bitcoin's price fell below the critical support level of around $87,000, triggering automatic sell orders and automated selling that deepened the decline. This extension also included alternative currencies like XRP and Solana, which fell by more than 3%.
· Rising Profit Offers: The percentage of Bitcoin addresses realizing profit currently stands at 90.1% (compared to 73.8% in September 2024), encouraging many holders to take profits and increasing selling pressure.
🌍 Macroeconomic Factors
· Shift Towards Safe Assets: In times of economic uncertainty, investors move towards safer assets like gold (which broke the $3,080 per ounce barrier) and bonds, leading to a withdrawal of liquidity from riskier assets like cryptocurrencies.
· Rising Yields on Government Bonds: The yield on 10-year U.S. Treasury bonds reached 4.22%, increasing borrowing costs and attracting capital away from risky assets.
· Anticipation of Economic Data: The market drop on September 4, 2025, came with anticipation of the U.S. labor market data report, which will affect interest rate cut expectations.
⚖️ Regulatory and Political Factors
· Changes in Regulatory Policies: Although the Trump administration has adopted a more supportive stance, including the repeal of the DeFi Broker Rule in March 2025, some previous regulatory tensions still affect the market.
· Ongoing Regulatory Uncertainty: Alternative currencies continue to suffer from vulnerabilities in smart contracts and regulatory uncertainty, making them less attractive to institutional capital.
🤖 Market and Behavioral Factors
· Automated and Algorithmic Trading: Automated trading systems react to breaches of support levels, accelerating selling and making the decline sharper.
· Decreased Liquidity in Alternative Currencies: The high dominance of Bitcoin (around 57.7% of total market cap) concentrates capital in it, while alternative currencies suffer from decreased liquidity and widening bid-ask spreads.
📉 Impact of Seasonal Factors
· "September Blues" Pattern: Historically, September is the worst month for cryptocurrencies, with Bitcoin recording an average return of -3.1% and Ethereum -12.7% in this month over the past decade. Although 2024 saw a break from this curse, negative bias still affects investor sentiment.
💰 ETF Fund Flows
· Flow Variance: While Ethereum ETF funds saw 11 consecutive days of inflows (+630 million dollars), Bitcoin ETF funds experienced three consecutive days of outflows (-1.2 billion dollars).
· Absorbing Selling Pressure: ETFs continue to act as a structural absorption tool for selling pressure, but recent flows have been cautious due to awaited Fed decisions.
📌 Summary and Additional Factors
· Decreased Exchange Reserves: Bitcoin reserves on exchanges decreased from 3,000,000 BTC in September 2024 to 2,400,000 BTC currently, reducing the ready supply for sale.
· Growth in Supply of New Tokens: The increase in new token issuance enhances capital dilution and distracts investor attention away from established assets.
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💎 Conclusion
The current downturn in the cryptocurrency market is a result of a complex entanglement of technical, macroeconomic, regulatory, and psychological factors. While the infrastructure has become stronger than in previous cycles (thanks to ETFs and institutional demand), the convergence of factors such as rising profit offers, global economic volatility, and seasonal factors creates a temporary selling environment. Close monitoring for improvement in macroeconomic conditions and increased liquidity may provide signals for future recovery.
