The "10.11" liquidation event, coupled with macroeconomic headwinds, has put pressure on the crypto market, placing it in a phase of "initial stabilization but no reversal."
Several VCs interviewed stated that the current continued correction in the crypto market is primarily driven by two factors: the concentrated liquidation event on October 10th and a tighter macroeconomic environment. Rob Hadick, a partner at Dragonfly, pointed out that low liquidity, inadequate risk management, and flawed oracle or leverage design led to large-scale deleveraging, triggering market uncertainty. Boris Revsin, a partner at Tribe Capital, also described the event as a "leveraged shakeout," which had a ripple effect across the entire market. Meanwhile, cooling expectations for short-term interest rate cuts, sticky inflation, weakening employment data, escalating geopolitical risks, and sluggish consumption have put overall pressure on risk assets over the past two months. Anirudh Pai, a partner at Robot Ventures, noted that some leading US economic indicators have begun to decline, a trend similar to that seen during previous "recession fears," and it is currently difficult to determine whether it will worsen into a full-blown recession. The VCs also mentioned that, apart from some tokens supported by buybacks, the market lacks new capital inflows, and the slowdown in ETF inflows has accelerated the price decline. Looking ahead, VCs believe the most crucial factor is the clarification of the macroeconomic path, including interest rate policy and the selection of future Federal Reserve leaders, which will have a significant impact on risk assets. Data gaps also amplify volatility; for example, the next employment data is seen as a key signal. Furthermore, long-term drivers such as accelerated on-chain economic activity, the spillover of AI trading sentiment, and the trends in payments and tokenization remain underestimated by the market. At the current stage, VCs generally believe the market has entered a "preliminary stabilization period," but this is insufficient to declare a bottom. Bitcoin has rebounded from around $80,000, and ETF inflows have improved slightly, but overall, it remains sensitive to interest rates, inflation, and AI earnings reports. Many respondents consider the $100,000-$110,000 range for Bitcoin to be a crucial area for a market sentiment reversal. A more robust reversal structure is possible only if ETFs continue to see net inflows, derivatives open interest recovers moderately, and excessive leverage does not occur. Some investors point out that the current correction has reset the valuations of some high-quality, revenue-generating tokens to 2024 levels, while those with stronger on-chain fundamentals are relatively attractive; Bitcoin's dominance has not increased significantly during this correction, indicating that there is still demand for high-quality Altcoins. (The Block)
