The cryptocurrency market unexpectedly turned downward at the end of October, despite a series of seemingly positive macroeconomic and regulatory developments. Analysts from CryptoQuant say the sell-off reflects weakening institutional demand and increased caution amid uncertain monetary policy signals.
Among the positive catalysts were:
- The U.S. Federal Reserve cut its benchmark interest rate by 0.25%, lowering it to 3.75%–4%, and officially ended the quantitative tightening (QT) program.
- The United States and China agreed to a temporary “trade truce”, easing global tensions.
- Approval of staking-based ETFs for altcoins boosted sentiment across parts of the market.
Despite these factors, Bitcoin and major U.S. stock indices both declined. According to CryptoQuant, institutional appetite remained weak — one of the key indicators, the Coinbase Premium Index, turned negative again. This suggests that large U.S. investors were selling rather than buying, even as retail traders showed renewed optimism.
Historically, similar patterns have preceded short-term market corrections. While retail investors often respond positively to macro news, institutional players tend to wait for stronger policy clarity before committing capital.
The most influential driver behind the market cooldown appears to be comments from Federal Reserve Chair Jerome Powell. Although the Fed is set to officially end QT on December 1 — effectively halting liquidity outflows — Powell cautioned that a further rate cut in December is “not guaranteed.”
At the same time, geopolitical uncertainty remains high. Despite public statements of cooperation between the U.S. and China, insiders described the recent negotiations as merely a “temporary truce.” Rising concerns over Taiwan and reports of renewed nuclear testing discussions in the U.S. have only added to investor unease.
The Nikkei 225 index in Japan was one of the few bright spots, reaching record highs as the Bank of Japan maintained its dovish policy stance and a stable yen. However, that regional strength wasn’t enough to offset the broader global risk-off sentiment.
“This sell-off wasn’t irrational,” analysts at CryptoQuant summarized. “After weeks of euphoria, speculative momentum has cooled. Institutional demand weakened, monetary clarity faded, and geopolitics grew more complicated. Still, medium-term prospects remain positive — liquidity is expected to improve once QT officially ends, potentially reigniting risk appetite in early 2026.”
