"Decline in virtual asset market reflects risk-off sentiment…some regard it as a 'healthy correction'"

This week the virtual asset (cryptocurrency) market was shaken by risk-off sentiment, but some analysts characterized the recent plunge as a 'healthy correction.'

On the 15th (local time), The Wall Street Journal (WSJ) reported that experts analyzed the recent marketwide decline and hawkish remarks by Federal Reserve (Fed) officials as having lowered expectations for rate cuts, increasing downward price pressure. They also pointed to concentrated selling by virtual asset exchange-traded fund (ETF) holders and shareholders of 'coin-holding companies (DAT·crypto-treasury companies)' as exacerbating the decline.

However, some analysts forecast that it is unlikely to lead to a prolonged bear market. They said the market has not entered a bubble phase like in the past, and the major speculative catalysts that triggered previous downturns are absent. For example, the 2017–2018 ICO frenzy or the under-collateralized lending collapses of 2021–2022 are not present as catalysts now.

In this regard, Frank Downing (Frank Downing), ARK Invest research director, told the WSJ, "We are looking very carefully for the kind of risk signals seen in the past, but in the absence of such factors, we do not expect a prolonged deep bear market in Bitcoin or the overall cryptocurrency market."