"Virtual asset market, leverage liquidations amid extreme fear… this correction's shock scope is broader"

Investor sentiment in the virtual asset (cryptocurrency) market remains in the 'fear' zone, and analysts say recent selling is unfolding differently from past correction phases.

On the 2nd, Bloomberg TV reported, "The crypto fear & greed index registering 23 that day reflects an extremely contracted market sentiment," adding, "With most leveraged positions liquidated, traders are holding cash assets and waiting. The overall mood lies between bearishness and caution."

The outlet pointed to a change in the way risk is transmitted as a characteristic of this decline. It explained, "In recent months, as virtual assets have been incorporated into the institutional sphere, Digital Asset Treasury (DAT) has emerged," and "This strategy involves companies pooling funds to stockpile virtual assets, and the recent price plunge has put direct pressure on these companies as well."

It went on to note, "In the past, risk remained within the virtual asset market, but now, through the DAT structure, risk is spreading to a broader area," emphasizing, "This correction is transmitting strain to traditional markets via investment instruments."

Regarding flows into virtual asset investment products, the outlet said, "Some single-stock ETFs linked to specific strategies have recently posted the worst performance among all crypto-related products." It also assessed that inflows into spot Bitcoin ETFs have been slow and lukewarm.

Meanwhile, attention was drawn to the fact that the U.S. central bank (Fed) is discussing rules related to banks and stablecoins. The outlet noted, "Regulations are not yet in effect, but they could become a major variable in the future," adding, "Many market participants are awaiting the March announcement next year."