The recent selloff in major cryptocurrencies has deepened, but analysts say the move reflects macro headwinds from traditional finance rather than crypto-specific weaknesses. After October 10, investors had already pared risk, with the decline driven by external liquidity and risk-off sentiment affecting broader markets. Traders pointed to an unwind of yen carry trades as a key catalyst, as rising borrowing costs prompted investors to tighten exposure to high-risk assets, including crypto.
Bitcoin- and crypto-linked exchange-traded products absorbed the impact, with Bitcoin ETF assets slipping from about $150 billion to roughly $100 billion; net outflows since October totaled around $12 billion. Analysts caution this does not indicate a wholesale exodus by institutions, but rather a reshuffling of assets among different holders. Some market participants note that funds are not leaving the market entirely but moving into new hands.
Looking ahead, JPMorgan’s Emma Lovett, a credit lead, warned that 2025 could mark a regulatory turning point as the U.S. environment loosens, enabling experiments in traditional securities settlement using private blockchains and stablecoins on public networks. While the liquidity dynamics weigh on crypto, officials say the larger narrative may hinge on regulatory evolution and broader risk sentiment than crypto fundamentals alone.
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