Under the Resonance of Multiple Favorable Factors, the Logic of the Crypto Market's 'Warm Trend'

The recent positive performance of the crypto market is the result of the resonance of multiple favorable factors such as policy, liquidity, and seasonal demand, which is underpinned by a significant increase in market risk appetite.

The signals from the Federal Reserve are the core driver: the new chairman's expectations combined with news of interest rate cuts and an early end to balance sheet reduction have directly released a clear signal of 'liquidity easing' to the market—previously, the contraction of U.S. dollar liquidity during the tightening cycle was a key factor suppressing the valuation of crypto assets, while easing expectations not only reduced the opportunity cost of holding crypto assets but also increased the attractiveness of risk asset allocation, making the valuation repair of mainstream cryptocurrencies like BTC and ETH a natural market choice.

At the same time, the changes in supply and demand during the Western holiday season further amplified the market heat: under the holiday consumption scenario, the actual demand for payment-related cryptocurrencies has increased, and the 'holiday allocation' behavior of institutional and individual investors has injected short-term incremental funds into the market. This seasonal demand, combined with the favorable policies, has created a 'double impact effect' that has boosted the trading activity of cryptocurrencies.

However, the current market still needs to be viewed rationally: there is a time lag in the implementation of policy signals, and holiday demand also has short-term characteristics, while the volatility nature of the cryptocurrency market has not changed. Nevertheless, it is undeniable that the concentrated release of multiple favorable factors has verified the strong correlation between cryptocurrency assets and macro liquidity, and it reflects that the market's confidence in the long-term development of the industry is returning—if policy easing is implemented and real demand continues to warm up, the cryptocurrency market may shift from 'emotion-driven' to a more stable market supported by 'fundamentals'.