The recent status of the currency circle,,,
1 Recently, although the global financial market has ushered in multiple positive factors, such as China's implementation of loose monetary policies and U.S. dollar interest rate cuts, which should theoretically drive funds to flow into various asset markets, the crypto market has failed to attract a torrent of funds.
2 On the contrary, investors prefer to flock into traditional asset areas such as stocks and real estate, while being cautious about riskier crypto-assets.
3 Behind this phenomenon, multiple factors are intertwined. First, the pressure on project parties and institutions to unlock and cash out has increased significantly. Compared with the past, new projects today are more financed through private equity channels, making it difficult for ordinary investors to get involved. After these early venture investors enter the public market, they often choose to sell and cash out to obtain huge returns, thus bringing continuous selling pressure to the market and suppressing price increases.
4 Secondly, excessive fragmentation in the altcoin market is also a big problem. The fully diluted valuation (FDV) of many new tokens is high, while the actual circulation is extremely low, resulting in severe fragmentation of market liquidity. As locked tokens are gradually unlocked and enter the market, these high FDV tokens will put continued downward pressure on prices.
5 In addition, external investors have a clear lack of confidence in the crypto market. In recent years, significant market fluctuations and frequent negative events such as the collapse of the FTX exchange and the collapse of the LUNA project have made many potential investors take a wait-and-see attitude towards the crypto market and are reluctant to get involved easily.
6 The lack of new market hot spots is also a major challenge facing the current encryption market. During this cycle, we have yet to see the emergence of new hot spots that can attract public attention and drive market sentiment like early innovations such as ICO, DeFi, and NFT.
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