Sentiment, not fundamentals, influences crypto, according to Sygnum CIO Fabian Dori.
Summary
- Macro shocks, not fundamentals, drove the crypto market crash
- Crypto markets have been overleveraged for a while, making a correction healthy
- Indicators, including the CME open interest, funding rates, and RSI, indicate worsening sentiment
Crypto’s fourth-quarter sell-off has erased Bitcoin’s year-to-date gains and pushed the broader market into negative territory. Crypto bank Sygnum says the latest drawdown does not mark the end of the current cycle.
In his latest briefing, Dori explained that the sharp liquidation wave that hit the crypto markets was driven by macro shocks, not by underlying fundamentals. These shocks included the White House announcement of 100% tariffs on China, uncertainty over the government shutdown, and a lower likelihood of rate cuts.
Dori says:
“The shift in narrative was triggered less by fundamentals and more by a sudden re-pricing of risks at a time when investors were already debating whether the Four-Year Cycle had peaked.”
Indicators suggest correction, not collapse
These factors have helped unwind the excessive leverage among Bitcoin (BTC) and altcoin traders. Notably, Dori highlighted a decrease in CME open interest, with funding rates on Binance temporarily turning negative. What is more, the crypto fear and greed index reached multi-year lows, as RSI in crypto blue chips.
According to Dori:
“These signals reflect sentiment capitulation rather than long-term deterioration in fundamentals. reached oversold territory. The current environment is uncomfortable in the short term, but historically it has offered attractive entry points for investors with a mid-to long-term horizon, rather than cycle endings.”
While the Q4 correction has been painful, the crypto market outlook is strong in the medium term. In particular, liquidity, on-chain metrics, and regulatory changes are expected to drive recovery after the crypto market crash.
