Web3 consulting firm Dispread's research division 'Dispread Research' published a report on recent cryptocurrency market volatility and its causes on the 13th. The cryptocurrency market has shown significant volatility since Donald Trump's presidential inauguration last month. According to the report, Bitcoin prices dropped by up to 7% due to the DeepSick incident on the 27th of last month. On the 6th, the decline widened to 12% due to President Trump's tariff policies on Canada, Mexico, and China. Although there was a short-term rebound, the overall bearish trend continues. The research team identified major factors intensifying current crypto market volatility as △liquidity environment constraints △U.S. economic and Trump administration policy direction △possibility of U.S. crypto industry integration. The report noted that while the U.S. asset market has maintained liquidity through short-term bond supply since 2023, the Federal Reserve's reverse repo account balance is nearly depleted, and liquidity could be further restricted if debt ceiling negotiations remain unresolved. The Fed has implemented Quantitative Tightening (QT) since June 2022, with early termination possibilities discussed early this year. However, Fed Chairman Jerome Powell's recent statement that "there is capacity to continue QT" suggests the tightening stance will likely continue until at least June. Dispread Research analyzed, "U.S. asset market liquidity is rapidly shrinking," adding "the crypto market's sensitivity to liquidity changes is making market instability more pronounced." The U.S. economy maintains robust growth. The Atlanta Federal Reserve's GDP growth forecast (GDPNow) consistently shows around 3%, indicating continued economic expansion. However, this growth trajectory could prolong Fed's tightening stance by stoking inflation concerns. The Trump administration is pursuing three main economic policies: tax cuts, government restructuring, and tariff implementation. The report assessed these policies might contribute to higher U.S. economic growth long-term but could increase market anxiety short-term through reduced fiscal spending and rising inflation. In December last year, Chairman Powell implemented hawkish rate cuts, stating readiness to "adjust monetary policy stance as needed." However, the report analyzed that "Trump administration policy uncertainty is expanding inflation risk, likely leading to continued market volatility." Post-Trump administration, the most important narrative in the crypto market is 'Mass adoption possibility.' While mass adoption has been discussed before, its importance is now more emphasized due to U.S. government policy direction changes. The report highlighted three key factors for the crypto industry: △U.S. government's potential Bitcoin holdings △large-scale stablecoin adoption △possible SEC regulatory easing. However, market direction remains uncertain until these factors are confirmed. Dispread Research team stated, "The crypto market is currently dominated by speculative narratives like meme coin trading, with new projects' visions losing credibility," forecasting "continued market instability likely amid liquidity shortages and significant macroeconomic and political variables." Research Team Leader Seunghwa Lee said, "The crypto market that surged after Trump's election is experiencing high volatility due to liquidity constraints and Trump administration policy implementation," adding "market volatility will likely continue until these policies materialize, and long-term industry self-development efforts are needed."
February 13General
