The Funding: VCs discuss the crypto correction and what’s next

Venture capitalists (VCs) attribute the recent sharp crypto market correction, which erased yearly gains for assets like Bitcoin and Ether, to two primary factors: a major liquidation event on October 10th, driven by low liquidity and poor risk management, and a deteriorating macro environment characterized by fading rate cut expectations, sticky inflation, and increased geopolitical risks. VCs noted that the lack of fresh capital inflows, outside of tokens supported by buybacks or digital asset treasury companies, has exacerbated the price decline. Looking ahead, the most crucial catalyst is macro clarity, particularly regarding the Federal Reserve's path for interest rate cuts. Furthermore, the return of normal economic data, especially the upcoming JOLTS report, is vital as investors have been trading on uncertainty due to a dearth of data following a government shutdown. Some VCs also see underpriced catalysts in the accelerating shift of economic activity on-chain and the evolution of the AI trade, which is currently correlated with crypto. While there are early signs of stabilization, such as Bitcoin bouncing off lows and slight ETF flow improvements, VCs view this as an early stabilization phase rather than a clear rebound, with the $100,000–$110,000 Bitcoin range being a key sentiment shift indicator.

(Source：The Block)