In the past week, the cryptocurrency market experienced a significant correction after a rapid rise. BTC dropped from a high of about $126,000 to a low of $104,800, a decline of over 14%, with ETH also weakening simultaneously. Short-term liquidity tightening and rising macro risk aversion became the main triggering factors, but from on-chain data and funding structure, this round of adjustment seems more like a phase of digestion rather than a trend reversal.

Macroeconomic Disturbances and Cooling Risk Appetite

At the end of October, the U.S. announced a 100% tariff on Chinese goods, triggering a rise in global risk aversion. Meanwhile, U.S. Treasury yields increased, leading to a short-term withdrawal of funds from high-risk assets, suppressing the upward momentum of digital assets. The cryptocurrency market's sensitivity to liquidity changes was once again highlighted. The net inflow of stablecoins has slowed since mid-last month, indicating that institutional funds are on the sidelines, while retail trading enthusiasm has also cooled with price fluctuations.

On-Chain Fund Flows Indicate "Structural Adjustment"

From on-chain indicators, long-term holders (LTH) did not significantly reduce their holdings after the price fell below $110,000, but rather showed slight signs of accumulation; short-term traders (STH) concentrated on selling above $115,000, indicating that the market is still in a healthy turnover process. The Matrixport research team pointed out that this funding flow characteristic suggests that the market is transitioning from "short-term speculation to mid-term holding," with the volatility range likely remaining between $105,000 and $120,000.

Institutional Holdings Remain Strong, ETF Funds Still Supportive

Although the overall market adjustment is evident, there have been no significant redemptions in BTC spot ETFs in the U.S. According to statistics, the net outflow of funds from major ETFs is limited, and institutional investors still show interest in long-term allocations. Additionally, the open interest in CME BTC futures remains high, indicating that market participation has not significantly declined. Some institutions have begun to utilize the volatility range to structure products to enhance yield elasticity.

ETH Performance Diverges, Ecosystem Fund Inflows Continue

ETH prices are under short-term pressure, but on-chain activity and ecosystem fund flows remain relatively robust. The total value locked (TVL) in DeFi has slightly rebounded amid fluctuations, and the ETH staking ratio remains high, indicating that long-term investor confidence has not been undermined. Driven by Layer 2 and restaking, the narrative around the ETH ecosystem remains clear, potentially providing structural support for the market's recovery.

Strategic Advice: Yield Management in a Range-Bound Market

In the short term, the market may continue to be influenced by macro and liquidity factors, and increased volatility is inevitable. Matrixport advises investors to maintain flexible allocations, using structured products (such as dual-currency wealth management, cumulative options AQ, etc.) to lock in yield ranges and balance risk and return in a volatile market. For medium to long-term investors, this round of correction provides a phased accumulation opportunity, especially after macro policies become clearer and funding costs peak, the digital asset market is expected to welcome a new round of recovery.

This market adjustment appears more like a natural correction of the previous overheating sentiment rather than a trend reversal. The stability of on-chain funds and institutional positions indicates that the market's foundation remains intact. Investors can optimize asset allocation during the volatility period and focus on structured yield products to capture certain returns amid uncertainty.

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

Disclaimer: The market carries risks, and investment should be approached with caution. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided in this content.

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