"Virtual asset market plunge due to multiple overlapping factors... likely a temporary correction within the cycle"

Over the past week, the virtual asset (cryptocurrency) market has remained weak, and analysis suggests this correction is the result of several factors acting simultaneously rather than a specific event.

On the 17th (local time), Ryan McMillin, Chief Investment Officer (CIO) of MerkleTree Capital, told Cointelegraph, "Long-term holders are realizing profits after the rally, and the environment that supported market liquidity has weakened."

McMillin pointed to the recent switch of spot Bitcoin exchange-traded funds (ETFs) to net outflows in recent weeks as a major cause. He explained, "As the ETF buying that drove the initial rally has slowed, global markets have shifted to risk-off flows, and expectations for rate cuts have also retreated," adding, "All these factors combined create a structure in which, amid weak buying pressure, older coins come onto the market."

The industry also sees macro uncertainty having a negative impact. Holger Arians, CEO of Bangsa, said, "A correction to the risk-asset rally that has continued over the past year is occurring in a situation where geopolitical tensions and valuation pressures on tech stocks have increased."

However, the prevailing view is that market structure is more resilient than in past cycles and that this decline is likely a temporary correction within the cycle. In this regard, McMillin said, "The current market structure is different from the past, and ETF and institutional liquidity are absorbing a large portion of the selling. The current flow can be seen as a healthy adjustment phase."