In previous cycles of the crypto market, asset prices often experienced rapid increases followed by sharp corrections, forming distinct bull and bear cycles. However, after a strong rally in early 2025, the momentum of Bitcoin and mainstream crypto assets has noticeably slowed, and the market has entered a period of consolidation. Investors are beginning to question whether this cycle has lost its upward momentum.
One of the key reasons is the tightening of liquidity. In the past few years, large-scale easing by global central banks fueled a broad rise in risk assets, and the crypto market benefited significantly. But now, major economies' central banks have shifted to monetary tightening, slowing the inflow of new funds into the market, resulting in a lack of sufficient impetus for asset price increases. Even when traditional markets such as stocks rebound, crypto assets have failed to keep pace, precisely because they are highly sensitive to changes in liquidity.
The decline in liquidity not only affects retail sentiment but also inhibits the willingness of institutional funds to enter the market. The inflow of funds into financial products such as crypto ETFs is gradually declining, further weakening the capital support for market breakthroughs.
Another structural pressure comes from token unlocks. Many project teams and early investors hold tokens with lock-up periods, which may be sold off in bulk once unlocked. Especially in the altcoin market, where the demand-side absorption capacity is inherently limited, a large influx of new supply can easily trigger downward price pressure. Data shows that from the second half of 2025 to the beginning of 2026, dozens of mainstream projects will release tokens worth hundreds of millions of dollars, and the market supply and demand balance will face severe challenges.
In addition, the uncertainty of the global regulatory environment continues to suppress institutional confidence. The policy directions in the United States, the European Union, and other regions remain unclear, and issues such as tax rules, compliance thresholds for trading platforms, and stablecoin regulation are still unresolved. When the regulatory outlook is unclear, large funds are more inclined to avoid high-risk assets and instead allocate to targets protected by clear laws. This cautious sentiment has exacerbated the outflow of funds from the crypto market.
Overall, liquidity contraction, token sell-offs, and regulatory shadows collectively constitute the core drivers of the underperformance of this cycle. Without new catalysts, the market may remain in a low consolidation pattern for a long period.