Risk markets are gradually reaching new all-time highs, so why is the cryptocurrency market led by BTC declining?

Here are some summarized reasons:
① Macroeconomic environment and policy expectations: Major global economies are shifting their monetary policies towards easing, providing support to traditional risk markets such as stocks, and driving their upward movement. However, the cryptocurrency market faces a different situation. In 2025, the US core PCE inflation rate increased by 2.8% year-on-year, exceeding the Federal Reserve's 2% target, shattering the market's previous expectation of a rate cut cycle starting in Q4 2025. At the November Federal Reserve meeting, Powell explicitly stated that "interest rates will remain high for a longer period," leading to a re-pricing of funding costs. As high-risk assets, cryptocurrencies face increased capital outflow pressure.
② Internal market structure issues: First, long-term holders taking profits at highs have caused selling pressure. After Bitcoin hit a record high of about $126,000 in early October 2025, addresses holding Bitcoin for over 5 years showed significant reduction in holdings in Q4 2025, exerting continuous selling pressure on the market. Second, ETF capital inflows and "whale" sell-offs create structural hedges. Although US spot Bitcoin ETFs continue to attract institutional inflows, with a total net inflow of about $22.1 billion for the year, during the same period, Bitcoin balances of "whale" addresses decreased, forming a hedge that weakens the price-driving effect of capital inflows. Third, excessive leverage triggers chain liquidations. On October 10, 2025, at least $20 billion in leveraged positions were liquidated. The crypto market's high leverage ratio causes chain reactions during price declines, intensifying market volatility.
③ Regulatory uncertainty: A comprehensive, clear, and unified regulatory framework for cryptocurrencies is still lacking globally. Regulatory policy uncertainties are obstacles for large-scale institutional capital entry and also affect investor confidence in the crypto market. For example, the European Central Bank plans to launch the digital euro by 2029, which may have a substitutive effect on cryptocurrencies; the US SEC is still advancing new regulations for crypto derivatives, and if margin requirements are increased, leverage space will be further compressed.
④ Application bottlenecks and trust crisis: Besides speculation and store of value, large-scale and disruptive applications of blockchain technology in the real economy have yet to emerge. Hot topics like DeFi, NFTs, and the metaverse lacked new breakthrough stories in 2025. Cryptocurrencies without practical utility are prone to being sold off when market risk appetite declines. Additionally, incidents such as exchange collapses, stablecoin de-pegging, and rug pulls from project teams have never ceased. These events constantly remind investors that the crypto market still lags behind traditional finance in infrastructure security, investor protection, and moral hazard.
⑤ Competition from safe-haven assets: Amid increasing global economic uncertainty, capital instinctively seeks safe havens. Gold, as a traditional safe-haven asset, reaffirmed its position in 2025, with funds flowing into gold ETFs and physical gold bars. The so-called "digital gold" attribute of cryptocurrencies has not yet gained widespread acceptance in the face of systemic risks. During initial panic, US dollar cash remains the first choice for safe-haven funds due to its liquidity. In the competition with traditional safe-haven assets, cryptocurrencies are at a disadvantage.