Signals of a reversal in the cryptocurrency market amid macroeconomic uncertainty

As the macroeconomic environment is rapidly changing, cryptocurrency investors are facing more complex asset allocation strategies than ever before. By analyzing the flow of capital over the past three months through intriguing events, we can see that the current market is entering a new cycle. The prediction event on Polymarket in October last year, asking “Gold vs. Ethereum, who will break $5,000 first?” exemplifies this turning point.

At that time, Ethereum was approaching $4,800, and the market assessed an 80% probability that ETH would surpass $5,000. Many crypto advocates were confident that “the era of digital assets has arrived.” However, three months later, the reality has shifted dramatically. While spot gold broke $5,100 per ounce at the end of January, Ethereum fell to around $1,970 (mid-February). Bitcoin also experienced over 30% correction, stabilizing around $68,420 (mid-February).

The Mechanism of Macro Asset Cycles: Why Gold Wins and Crypto Loses

In times of macroeconomic crises, capital flows follow predictable patterns. During periods of extreme uncertainty, capital tends to flock into assets with near-zero credit risk, then reallocate into high-yield assets as risk perception eases.

Several macro factors have driven recent gold surges. First, concerns over the credit risk of the US dollar are intensifying. Denmark’s academic pension fund AkademikerPension announced it would liquidate about $100 million worth of US Treasuries due to serious worries about US fiscal health. Sweden’s largest private pension fund, Alecta, has also significantly reduced US Treasuries since early 2025, totaling between $77 billion and $88 billion. Major institutions cite US policy uncertainty and rising debt as key reasons.

Second, geopolitical tensions are escalating. Major events over the past few months include the US’s push to acquire Greenland in early 2026, attempts to arrest Venezuelan officials, and the imposition of 25% tariffs on Iran-related countries. The Russia-Ukraine conflict persists, and geopolitical risks remain unresolved.

Third, downward pressure on fiat currencies continues. Large-scale monetary supply increases and fiscal deficits are eroding the purchasing power of paper money. In this environment, hard assets like gold and silver have become natural safe havens.

Institutional outlooks on gold have been significantly upgraded. Goldman Sachs revised its year-end gold price target from $4,900 to $5,400, and Chinese banks raised their 2026 year-end target to $5,600. They emphasize that limited gold supply, driven by persistent buying from retail investors and emerging market central banks, is a key factor. In 2025, global central banks’ net gold purchases exceeded 1,100 tons, and this pace is expected to continue at over 60 tons per month in 2026.

The Decline of Crypto and Institutional Silence: Signs of a Macro Bear Market

In contrast, the crypto market shows a very different picture. Last week, Bitcoin spot ETFs experienced net outflows of $13.3 billion (second-largest weekly outflow in history), and Ethereum spot ETFs saw net outflows of $6.11 billion.

At the institutional level, signals are mixed. Strategy (MSTR), a Bitcoin investment firm, holds 709,715 BTC with an average acquisition price of $75,979, showing an unrealized gain of $10.813 billion. Conversely, BitMine (BMNR), an Ethereum investor, holds 4,203,036 ETH, but with an average purchase price of $3,857, resulting in an unrealized loss of $3.232 billion at current prices.

Renowned technical analyst Peter Brandt states that Bitcoin’s bearish channel has been completed and has issued a sell signal again. He notes that Bitcoin must recover to around $93,000 to invalidate this signal. Bloomberg analysts are even more extreme, estimating that the probability of Ethereum dropping below $2,000 in the short term is higher than the chance of returning to $4,000.

Clarifying the Bottom: Macro Reversal Conditions for Bitcoin and Ethereum

However, this downturn is only one phase of a long-term asset cycle. On-chain data suggest that bottom signals are becoming increasingly clear.

For Bitcoin, according to CryptoQuant, realized losses currently amount to $4.5 billion, the highest in three years. Historically, such large realized losses have been followed by about a year of correction before recovery.

At the institutional level, active movements are emerging. Bitcoin funds are continuing to buy through capital raising, and when MSCI decided not to exclude related companies from its indices, passive funds like Fidelity began purchasing related stocks.

For Ethereum, the situation is even more interesting. Over 36 million ETH are currently staked, accounting for nearly 30% of circulating supply. Notably, the staking withdrawal queue is nearly zero, indicating validators are actively demonstrating long-term network trustworthiness. Meanwhile, BitMine recently received shareholder approval to expand its share issuance limit, increasing the potential for ongoing ETH purchases.

When Will Macro Risks Ease? The Next Phase of Capital Flows

The current capital concentration in defensive assets like gold signals the peak of macro safety-seeking. This phase will inevitably come to an end.

Historically, every time major metal markets surge to extreme levels, the phenomena observed have been irrational. As gold approaches target prices and momentum wanes, or when major macro risks show signs of easing, profit-taking begins as investors seek the next high-yield opportunity. At that moment, crypto assets that have experienced deep corrections and leverage unwinding will become the most natural recipients of capital.

Particularly noteworthy is the market’s expectation that a senior BlackRock executive, Rieder, is nearly certain to become the Federal Reserve Chair, with a probability close to 50%, clearly ahead of other candidates. Analysts believe that if this scenario materializes, a favorable stance toward RWA and the crypto ecosystem could provide significant market momentum.

What crypto investors should focus on now is not guessing the market top. History shows that during periods of overlapping macro credit crises and inflation cycles, it’s difficult to pinpoint the peak of gold. Faithful crypto investors will need patience, waiting for macro risk signals to ease. We can only hope these signals appear somewhat earlier than expected.