How is the outlook for the crypto market? Challenges and opportunities in the face of macroeconomic upheaval.

During the Spring Festival, the crypto market experienced a severe turbulence. After the new president took office, a series of policy measures impacted the global financial market, with the crypto industry being the hardest hit. The prices of mainstream cryptocurrencies plummeted significantly, triggering large-scale liquidations, and market sentiment fell into a slump.

Despite a series of positive news, the market still shows weakness, and the volatility of cryptocurrency prices has intensified. The altcoin sector is particularly sluggish, with even the previously popular AI sector falling into silence. The market is beginning to question: Has the bull market already come to an end?

In fact, the main points of contention in the current crypto market are concentrated on the Federal Reserve's monetary policy and the presidential crypto policy. The Federal Reserve's monetary policy directly affects global liquidity, and its importance is self-evident. Recently, the Federal Reserve has paused interest rate cuts and removed some expressions regarding inflation easing, showing a cautious attitude.

At the same time, the tariff war initiated by the new government has intensified global risk aversion. Although the long-term effects remain to be observed, short-term inflationary pressures may rise. It is reasonable for the Federal Reserve to adopt a wait-and-see attitude in response to external uncertainties. The market generally expects that the first interest rate cut may come in June or July.

In addition to the macro environment, there is also uncertainty in the domestic political situation. The operations of some government departments have been affected, and the subtle relationships among the higher-ups have sparked market discussions. These factors may drive funds towards safer areas.

However, the new government's attitude towards the encryption industry has also brought about positive changes. Regulatory agencies have clearly shifted their stance on encryption, with the SEC reducing the scale of enforcement and the FDIC reassessing its regulatory approach. These measures have created conditions for the encryption industry to integrate into the traditional financial system.

The White House has also released positive signals, indicating that it will study the feasibility of Bitcoin reserves. Several states have initiated Bitcoin strategic reserve plans, which are expected to bring substantial incremental funding. Overall, the new government shows significant support for the crypto industry.

Despite the continuous positive news, the market reaction has been relatively subdued. The reason is that investor confidence remains weak, with risk aversion dominating. Although the prices of mainstream cryptocurrencies have not plummeted, their upward momentum is also lacking, and altcoins are performing even worse.

From the perspective of institutional trends, the long-term outlook remains optimistic. ETFs continue to attract capital inflows, particularly with strong demand for Ethereum ETFs. In the short term, Bitcoin may fluctuate within a certain range, while Ethereum faces potential further downside, but the risk of a significant drop is limited.

In contrast, the altcoin market faces greater pressure. Factors such as oversupply and insufficient liquidity restrict its performance. With the exception of a few projects backed by capital or popular themes, most altcoins are unlikely to see improvement in the short term.

In the current environment, closely monitoring macro indicators is crucial. Inflation data, central bank statements, and other information will directly impact market trends. For investors, maintaining caution and hedging may be a more prudent strategic choice.