Is the crypto market facing a winter? The impact of changes in the macro environment and shifts in regulatory attitudes.

After the Spring Festival, the crypto market seems to have fallen into a slump. There were originally hopes that the new president's inauguration would bring benefits to the encryption industry, but a series of events on February 3 struck the market hard. Against the backdrop of turmoil in the global financial market, cryptocurrencies have suffered a heavy blow. Bitcoin prices have plummeted significantly, and Ethereum's drop is even more astonishing, reaching its lowest point in nearly a year. A large-scale liquidation event followed, with an estimated 8-10 billion USD being liquidated.

Despite some positive news thereafter, mainstream cryptocurrencies have slightly warmed up, but market sentiment remains weak, and price fluctuations have intensified. Altcoins are performing poorly, and even the previously strong AI sector has fallen into silence. The market is beginning to discuss whether the bull market has already ended.

In fact, the main points of contention in the current crypto market lie in two directions: the Federal Reserve's monetary policy and the new government's crypto policy. The direction of the Federal Reserve's policy directly affects global liquidity, while the new government's attitude concerns the future development of the industry.

From a macro perspective, the Federal Reserve is currently taking a cautious stance. The latest non-farm payroll data shows a healthy labor market, but inflation expectations remain above target. The market generally expects that the Federal Reserve may start cutting interest rates in June or July, but the extent of the rate cuts may be less than previously anticipated.

The series of measures taken by the new government, such as increasing tariffs and expelling illegal immigrants, may raise inflationary pressures. In response to external uncertainties, the Federal Reserve may continue to maintain caution. This monetary policy stance has heightened market risk aversion, and funds may flow into safer assets.

However, at the regulatory level, the new government has a relatively friendly attitude towards the encryption industry. The tough stance of regulatory agencies such as the SEC has eased, and the application for altcoin ETFs has accelerated. Banking regulators are also re-evaluating their regulatory approach to crypto-related activities, paving the way for encryption to integrate into the traditional financial system.

The White House is still studying the feasibility of Bitcoin reserves, and several states have begun to promote Bitcoin strategic reserve plans. These initiatives are expected to bring new incremental funds and price support for Bitcoin.

Despite the continuous favorable policies, the market performance has been less than satisfactory. Mainstream cryptocurrencies are showing weak upward momentum, and altcoins are even worse off. Market sentiment is fragile, and macroeconomic uncertainties are affecting investor confidence. Bitcoin's price is fluctuating in the range of $93,000 to $98,000, while Ethereum is facing greater downward pressure.

Institutional investors continue to buy in, showing confidence in the long-term prospects. Especially Ethereum, despite recent pressure, the institutional layout indicates that there is still room for development in areas such as staking and tokenization of physical assets.

In contrast, the prospects for most altcoins are not optimistic. Currently, the number of altcoins on the market has exceeded 36 million, with a clear imbalance between supply and demand. Except for a few coins that have large capital support or are associated with popular speculative themes, other altcoins may continue to remain sluggish.

In the current environment, investors should closely monitor macroeconomic indicators. This week, several important data points will be released, including inflation expectations, CPI, and PPI. This data will affect the market's expectations for monetary policy, which in turn will impact the crypto market trends.

Overall, the crypto market is in a critical period. The uncertainty of the macro environment and the shift in regulatory attitudes have created a complex situation. Investors need to remain cautious and keep a close eye on policy developments and economic indicators to cope with possible market volatility.