The crypto market has fallen into a winter, has the bull run ended?

After the Spring Festival, the crypto market seems to have entered a period of stagnation. There were originally hopes that the new president's take office would bring new opportunities for the encryption industry, but a series of events on February 3 dealt a heavy blow to the market.

In the context of escalating global trade frictions, financial markets have experienced severe fluctuations. The US stock market has fallen, and the Asia-Pacific markets have also been affected. Although trade policies have eased later, the crypto market has suffered severe damage.

The price of Bitcoin has plummeted sharply, falling to $91,100 at one point, with a daily decline of about 7%. Ethereum has crashed by 25%, reaching its lowest point in nearly a year at $2,080.19. Tokens ranked in the top 200 by market cap have generally declined, triggering a large-scale liquidation, with an estimated $8-10 billion being liquidated.

This incident has become a watershed moment. Although positive news has emerged afterward and mainstream cryptocurrencies have shown some recovery, market sentiment remains fragile, leading to increased price volatility. Altcoins are performing poorly, and even the previously strong AI sector has fallen into silence.

In the current environment, the main focus of the crypto market is concentrated on two directions: the Federal Reserve's monetary policy and the new government's encryption policy.

The Federal Reserve's monetary policy directly affects global liquidity. Recently, the Federal Reserve halted its previous trend of interest rate cuts and kept rates unchanged. U.S. employment data shows that the labor market is in good condition, but inflation expectations have risen. These factors all influence the market's expectations for the Federal Reserve's future policies.

From a macro perspective, it is understandable that the Federal Reserve is taking a cautious approach, especially in the context of the new government's implementation of new trade policies. Global risk aversion is increasingly pronounced, and tariff policies may drive up inflation. To cope with external uncertainties, the Federal Reserve may continue to adopt a wait-and-see stance. Currently, the market generally expects the Federal Reserve to begin cutting interest rates in June or July this year.

In addition to the impact of the macro environment, the encryption industry is also facing challenges internally. Some senior regulatory officials have left, and the attitude of regulatory agencies is changing. Although this may bring some opportunities to the industry, it also increases uncertainty.

However, the new government's supportive attitude towards the encryption industry has also brought some positive factors. Regulatory agencies are beginning to reassess their regulatory approach to crypto activities, which may benefit the integration of cryptocurrencies into the traditional financial system. At the same time, some states have started to promote Bitcoin strategic reserve plans, which could bring new purchasing power to Bitcoin.

Despite these positive news, the market reaction remains cautious. Altcoins are performing weakly, and mainstream cryptocurrencies have limited gains. Market sentiment is fragile, with risk-averse factors dominating investment decisions.

From the movements of institutional investors, long-term confidence remains. The continuous inflow of funds into Bitcoin and Ethereum ETFs indicates that institutions are optimistic about the long-term outlook.

In the short term, Bitcoin may fluctuate between $90,000 and $106,000. Ethereum may further decline in price due to a lack of stability factors. The altcoin market faces greater pressure, with prominent issues of oversupply, making significant improvements difficult in the short term.

In this case, investors need to closely monitor macroeconomic indicators. The United States is about to release a series of important economic data, which will affect the market's expectations for future monetary policy.

Overall, in the current market environment, cautious hedging may be the best strategy.