Matrixport Market Watch: Finding Support Amidst Pressure, Crypto Market Enters a Critical Observation Period

The cryptocurrency market has experienced a significant correction over the past two weeks, driven by a combination of factors including macroeconomics, policy, regulation, and structural deleveraging within the industry. US economic data has remained resilient, but inflation has fallen less than expected, further narrowing the scope for interest rate cuts this year. The probability of a December rate cut has dropped from over 80% at the beginning of the month to around 50%, with high interest rates putting downward pressure on risk asset valuations. Meanwhile, several Federal Reserve officials have released hawkish signals, further reinforcing market expectations of "high interest rates remaining for longer." Coupled with the slow progress of cryptocurrency ETF approvals and geopolitical tensions, market risk aversion has clearly intensified.

BTC and ETH experience deep corrections, accelerating deleveraging in the industry.

Within the industry, the deleveraging process has accelerated significantly. Rumors of "whale sell-offs" and the concentrated liquidation of highly leveraged long positions amplified the short-term decline. The tightening macro environment and structural industry consolidation resonated, becoming a major driver of this rapid market cooling. As of November 24th, Bitcoin was trading at approximately $87,000, and Ethereum at approximately $2,800. Over the past month, Bitcoin has been declining steadily from its high above $100,000 in late October, with a cumulative monthly pullback of approximately 20%, briefly dipping to around $81,600. Ethereum has fallen from a high of nearly $3,500, breaking below the $3,000 mark, with a monthly decline of approximately 15%–20%. Technically, the daily RSI for both BTC and ETH entered oversold territory, and sentiment indicators fell to "extreme fear" levels, indicating that short-term selling pressure has been largely released.

Stablecoin fund flows: Outflows slow down, nearing a temporary stabilization.

Regarding on-chain funding, the total market capitalization of stablecoins saw a net outflow of approximately $3 billion in the two weeks leading up to mid-November. USDC experienced significant redemption pressure, while USDT remained relatively stable. This outflow reflects a wait-and-see attitude among investors, but since late November, the net outflow has slowed considerably, showing initial signs of stabilization. Historically, multiple cyclical bottoms have often been accompanied by a halt in the decline of stablecoin supply; this signal warrants continued attention.

Risks in the derivatives market are rising: volatility at key price levels may be amplified.

The derivatives market is reflecting increased uncertainty. Implied volatility for short-term options has risen rapidly from its October lows to its highest level this year. Looking at the open interest distribution, a large number of $80,000 put options remained at the end of November, while a large number of $125,000 call options accumulated at the end of December, significantly amplifying Gamma exposure near these price levels. If prices approach key strike levels, short-term volatility could be further amplified.

Structural sectors remain resilient: medium- to long-term value still exists.

In the structural sectors, RWA, the Solana ecosystem, and Ethereum Layer 2 all corrected along with the broader market, but their fundamentals did not deteriorate substantially. The on-chain size and institutional participation of the RWA sector continued to increase throughout the year; Solana's on-chain activity maintained growth; and Ethereum's L2 locked value continued its expansion trend throughout the year, indicating that structural opportunities still exist.

Configuration Recommendation: Balance offense and defense amidst uncertainty.

For investors who believe the market has entered a value range and wish to gradually buy in to lower their costs, Accumulator (discounted accumulation) products are suitable. For investors concerned about further market declines and seeking to preserve capital while obtaining stable returns, daily dual-currency (inverse) products can be considered to achieve high returns while holding stable currencies. The current market is entering a critical turning point; investors are advised to adjust their strategy allocation according to their risk appetite: aggressive investors can use accumulation products to position themselves in core assets at low levels and capture price rebounds; conservative investors should focus on preserving capital and generating returns, obtaining certain returns through dual-currency and coupon products, and gradually reducing their positions as necessary. Matrixport's series of structured products allow investors to flexibly utilize option strategies in a bear market, achieving a balanced allocation that is both offensive and defensive.

The above content is from Daniel Yu, Head of Asset Management, and represents only the author's personal views.

Disclaimer: Investing in the market involves risks; please exercise caution. This article does not constitute investment advice. Digital asset trading can be extremely risky and volatile. Investment decisions should be made after careful consideration of your individual circumstances and consultation with a financial professional. Matrixport is not responsible for any investment decisions made based on the information provided in this content.