Analysis of the top ten negative factors affecting the crypto market: How serious is this "Bright Peak" siege?

Author: Shouyi , Biteye Content Team

This was the most difficult year for the cryptocurrency industry: Bitcoin continued to fall, futures contracts were liquidated one after another, no one was sending red envelopes in the group, and everyone went from "buying the dip" to "playing dead".

This decline is not a simple technical correction, but rather the result of multiple pressures erupting simultaneously: tightening global regulations, escalating geopolitical conflicts, the withdrawal of industry giants, and the collapse of retail investor confidence. These four forces are strangling each other, staging a "siege of the summit" in the cryptocurrency world.

However, a closer look at these ten negative factors reveals that many of these "bad things" are actually necessary steps in the maturation of the industry. Biteye will analyze each one for you below, and after reading, you'll know how to respond.

I. Regulatory Iron Curtain: Stablecoins, Taxation, and Platform Regulation

1. Stablecoin interest-bearing is about to be cut off.

Amid the legislative deadlock over the Clarity for Payment Stablecoins Act in the United States, the American Banking Association (ABA) and major systemically important banks (SIBs) have lobbied regulators to prohibit stablecoin issuers and intermediary platforms from paying interest to users, with violators facing administrative penalties of up to $500,000 per day.

Short-term impact: The attractiveness of stablecoins will definitely decrease, and coupled with the weakening of the US dollar, some TVL will flow out to other places;

Long-term impact: A complete ban is unrealistic; the most likely outcome will be a compromise with "limited rewards." The policy is expected to be implemented in the second quarter, and the market will gradually digest this expectation over the next 3-6 months.

2. A global tax network is coming.

The Crypto Asset Reporting Framework (CARF), led by the Organization for Economic Cooperation and Development (OECD), has officially come into effect in 48 jurisdictions (including the 27 EU member states, the UK, Japan, and South Korea), requiring exchanges to automatically exchange users' cross-border transaction data. The US has also simultaneously implemented the 1099-DA form.

Short-term impact: Compliance costs increased significantly, triggering panic selling by retail investors;

Long-term impact: Tax transparency is a prerequisite for traditional institutions to enter the market. It is expected that trillions of yuan in institutional funds will only be able to truly enter the market after full implementation in 2026; the current period is just a period of growing pains.

3. Even platform X is starting to restrict advertising qualifications.

Platform X has updated its advertising policy for prediction markets, requiring mandatory disclosure of all promotional content, which has significantly increased customer acquisition costs for project teams.

Short-term impact: The era of oral masturbation is over, and marketing and promotion on X are basically no longer viable;

Long-term impact: Good money drives out bad, helping to rebuild industry credibility. However, to be honest, there aren't many legitimate projects still advertising on X these days, so this regulation is more symbolic; its actual implementation remains to be seen.

II. Geopolitical Strangulation: War, Tariffs, and Head-of-State Diplomacy

4. With fighting breaking out in the Middle East, funds are fleeing to safe havens.

Trump's maximum pressure campaign against Iran, threatening a "small war followed by a big one," has driven risk aversion to push the US dollar index (DXY) up to 97.7, rising the 10-year US Treasury yield and pushing Brent crude oil above $65 per barrel. The global Economic Policy Uncertainty Index has reached a new high since the FRED database began compiling data, with funds flowing heavily into traditional safe-haven assets.

Short-term impact: Liquidity in the crypto market was instantly drained, most notably the disappearance of the USDT premium, which was replaced by a discount.

Long-term impact: Geopolitical shocks often come and go quickly. Based on historical patterns, pent-up buying often rebounds sharply within 1-2 months. Selling at a loss now to exchange for US dollars will most likely result in selling at the lowest point.

5. Trump's 15% tariff weapon comes down.

After the Supreme Court rejected the relevant relief request, the Trump administration, citing Section 122 of the Trade Act of 1974, raised the global benchmark tariff from 10% to 15% on February 24 for a period of 150 days. This policy, through a chain of "tariffs → inflation expectations → stronger dollar," has had the cryptocurrency market, as a high-beta risk asset, bearing the brunt of the impact.

Short-term impact: The negative impact usually peaks in the early stages of policy implementation. Referring to the tariff war in April last year, if negotiations between major powers break down, the suppression will quickly turn into a positive one after it is lifted.

Long-term impact: Trump is accustomed to applying maximum pressure before negotiations, and TACO has become a classic model; it is unlikely that the negotiations will actually last for 150 days.

6. The market is awaiting "head-of-state diplomacy" between China and the US.

The Trump administration announced plans to visit China from March 31 to April 2, but prior to that, it may employ "maximum pressure" tactics such as escalating tariffs and imposing technology blockades—a typical game theory strategy. The market will continue trading under this policy uncertainty until the end of March.

Short-term impact: This negative factor artificially amplifies volatility, and the market will continue to be shrouded in policy uncertainty.

Long-term impact: If the negotiations make substantial progress, global risk assets will see a window of liquidity release. It is expected that this negative news will be digested after the outcome of the talks becomes clear at the end of March; until then, "uncertainty" exists, and market volatility may increase.

III. Internal bleeding: liquidation, selling coins, and retreat

7. Wu Jihan liquidates his BTC holdings and fully shifts to AI.

BitDeer (NASDAQ: BTDR), controlled by Jihan Wu, recently liquidated approximately 1,132 BTC (worth about $72 million) and announced a full transformation into the AI ​​Data Center (AIDC) business. The company's IR statement emphasized that this was a "non-permanent zero position," essentially a balance sheet management measure to address the pressure of mining rig upgrades (4nm/3nm chip upgrades) and the capital expenditure needs for AI computing infrastructure construction.

Short-term impact: The panic caused by "miners selling off" has been further amplified. After all, if even mining giants are selling, how can retail investors hold on?

Long-term impact: The integration of AI and encrypted computing power is an industrial upgrading trend, not a systemic crisis for the industry. It is expected that once the AI ​​data centers are built, money will flow back into the cryptocurrency market.

8. Vitalik Buterin continues to sell ETH, and the price keeps dropping.

Ethereum co-founder Vitalik Buterin has been continuously reducing his ETH holdings through multisignature addresses, selling 1,869 coins in two days, bringing his total sales to over 7,000 coins (approximately $15.5 million). An official statement confirmed that the funds will be used to support long-term investments in research and development and biotechnology within the Ethereum Foundation. Compared to his total holdings of approximately $430 million, the reduction represents less than 0.36%.

Short-term impact: In the current weak market, Vitalik Buterin's actions have precisely undermined the confidence of ETH bulls, creating a vicious cycle of "the more you sell, the lower it goes, and the lower it goes, the more you sell." Many people on X are starting to question whether Vitalik Buterin is bearish on ETH; this kind of contagious sentiment is terrifying.

Long-term impact: It's a normal practice for founders to cash out and give back to the ecosystem, but the timing was just too unfortunate.

9. Influential online figures collectively call for investors to flee, and smart money exits the market.

Influential KOLs in the community, such as "Hanba Longwang," have publicly announced reductions in their trading positions by 30%-50% and expressed bearish sentiments. In a market environment with scarce liquidity, such voices are amplified through social media, creating a contagious effect. Now, some people in the group are already posting screenshots of their empty positions, showing clear signs of a herd mentality and panic selling.

Short-term impact: Bearish comments from on-chain experts and traders have a significant impact on the market;

Long-term impact: When the market's generally recognized "smart money" collectively and publicly exits, it often constitutes an excellent indicator of a reversal to a bottom. Of course, whether this time will be an exception is anyone's guess. Some KOLs may subsequently delete their posts and shift to a bullish stance; you can use the @xhunt_ai plugin to view the deletion history.

IV. Emotional Explosion: "Bitcoin is Dead," De-anchoring, and a Crisis of Trust

10. FUD (Feeling Uncertainty) erupts across the board, "Bitcoin is dead" floods social media.

Google Trends data shows that searches for "Bitcoin is dead" have reached their highest level since the FTX crash in 2022; the USD1 stablecoin briefly de-pegged to 0.98 USDT due to FUD; and blockchain detective ZachXBT announced that he will disclose evidence of insider trading by "the most profitable company in the crypto industry" on February 26.

Short-term impact: In this environment, the trust mechanism has been severely damaged, triggering indiscriminate selling.

Long-term impact: The surge in searches for "BTC is dead" is often the strongest signal of a market bottom – as seen in 2018 and 2022. The exposure of ZachXBT is expected to trigger short-term safe-haven selling, but in the long term, it will help the industry weed out its bad actors and foster new growth.

V. Technical Data: It's really bad, but it may be nearing its bottom.

Looking at the data, it's indeed dire. Three key indicators (BTC Oversold Index, AHR999 Bottom-Fishing Index, and Extreme Fear Index) are approaching historical extreme levels. These indicators suggest that the current market is nearing its historical oversold limit, but hasn't yet broken the longest record, and the market's search for a bottom may continue for another 1-2 months.

On the optimistic side, historical data shows that "new life often arises from despair," and after recovering from the aforementioned extreme indicators, BTC's 90-day return averages over +50%. Considering Trump's scheduled visit to China at the end of March, the fastest reversal window is expected to open in March.

From a pessimistic perspective, if Trump's visit to China at the end of March breaks down, or if ZachXBT really makes a major scandal (such as the confirmation of Tether's reserve fund fraud), all of the above "bottoming out signals" may become invalid. Users are advised to decisively reduce leverage in the short term and closely monitor ZachXBT's revelations and the progress of Trump's visit to China.

Market advice: Survival is more important than calculating profits.

Looking back at the top ten negative factors recently, 60% came from regulation and geopolitics, and 40% came from internal selling pressure and emotional collapse. While they all seem negative, a closer look reveals that about 70% of these negative factors will turn into positive ones in the medium to long term – the regulatory iron curtain builds a compliance moat for traditional funds, and low sentiment is often the darkest night before dawn.

The "buying the dip" and "shorting" sentiments on Twitter are mostly driven by emotions. When the market truly hits rock bottom, the group chat should be completely silent, not like now where people are still arguing about "whether it's the bottom."

"Siege of Bright Peak" is not the endgame of crypto - more important than how much profit you make is staying at the table.