*Searching for the reason behind the crypto market decline:*
The decline is largely a result of macro-economic headwinds and changes in market sentiment.
*Key factors pulling prices down:*
- *Concerns over Bank of Japan rate hikes* – Traders are preparing for a 0.25% BoJ increase this week, and history shows that when Japanese rates rise, Bitcoin generally falls.
- *Risk-off sentiment* – The broader crypto market has entered a 'risk-off' phase, with the total market cap around $3.04 trillion and the Fear and Greed Index trapped in the 'fear' zone, prompting investors to reduce their exposure ahead of the Fed's next move.
- *Institutional outflow and tightener liquidity* – Recent data indicates that there is a net outflow from crypto ETFs and buying volume is decreasing, which often precedes a correction before large players pull back.
At the same time, some analysts say the market is simply in a consolidation phase, not fully in a bear trend. The same tightener liquidity causing the decline may set up a sharp rebound phase after the next catalyst (e.g., a clear stance from the Fed or a breakout above key resistance). The recent short-term dip may appear like a decline, but the underlying dynamics are a mix of precautionary profit-taking and macro-driven pressures.
