In its latest market analysis, renowned cryptocurrency market maker Wintermute pointed out that despite a generally accommodative macro environment—with increasing expectations for interest rate cuts, a slowdown in quantitative tightening (QT), and U.S. stocks remaining at high levels—the performance of the crypto market has significantly lagged behind traditional financial assets. This divergence indicates that crypto assets are no longer simply following the old logic of the "Bitcoin four-year halving cycle" and are entering a new phase dominated by global liquidity.
Wintermute emphasized in the report that global capital is expanding, with signs of central bank balance sheet growth and liquidity release gradually emerging. However, these new funds are not flowing into the cryptocurrency sector as they did in the past. Traditionally, when market liquidity is loose, crypto assets like Bitcoin and Ethereum tend to rebound quickly and drive the overall market higher. Yet, this year's trend has shown a clear divergence: activity in the crypto market has declined, price movements have been weak, while traditional assets such as stocks and precious metals have performed strongly.
From a data perspective, among the "three major funding engines" that drove the crypto market's recovery in the first half of the year, only stablecoin supply is still growing. The report shows that the total stablecoin supply has increased by approximately 50% year-to-date, adding over $100 billion. This suggests that some investors are still holding funds on the sidelines, waiting for the right time to enter the market. Meanwhile, ETF inflows have stagnated since the summer, with the assets under management (AUM) of Bitcoin spot ETFs hovering around $150 billion, failing to expand further. Additionally, Digital Asset Treasury (DAT) related activities have nearly dried up, and institutional trading interest has significantly declined.
In the altcoin sector, the market has generally suffered heavy losses. Gaming-related tokens fell about 21% weekly, Layer 2 network tokens dropped 19%, and Meme coins declined by 18%. Only themes such as Artificial Intelligence (AI) and Decentralized Physical Infrastructure Networks (DePIN) showed some resilience. This divergence reflects investors' declining risk appetite, with capital favoring sectors that have clear practical applications or real yield support.
Wintermute believes the crypto market is transitioning from being sentiment-driven to liquidity-driven. The widely held "four-year halving cycle" theory is gradually becoming obsolete as the market matures and institutional participation deepens. The current crypto ecosystem more closely resembles high-risk assets in traditional markets, where price movements depend on global liquidity changes and capital allocation efficiency rather than a single time cycle.
Finally, the institution noted that key indicators to watch for the future market will be the resurgence of ETF inflows and the recovery of DAT activities. If institutional funds return and trading volumes rebound, the return of liquidity could signal a renewed upward momentum for crypto assets. Until then, the market may remain in a transitional phase of "waiting for the liquidity tide to return."
