Analysis: The "1011" liquidation event and the increasingly difficult macroeconomic environment are the main reasons for the recent decline.

According to ChainCatcher, Bitcoin and Ethereum have erased all their gains for the year—a dramatic turnaround for a market that just two months ago witnessed Bitcoin surge to an all-time high of $126,000. VCs point to two main reasons behind this correction: the liquidation event on October 11 and an increasingly challenging macroeconomic environment.

Rob Hadick, a general partner at Dragonfly, said the deleveraging event, triggered by low liquidity, poor risk management, and weak oracles or leverage mechanisms, has caused significant losses and created enormous uncertainty.

Boris Revsin, general partner and managing director at Tribe Capital, shares this view, calling it a "leverage cleansing" that has had a ripple effect across the market. Meanwhile, the macroeconomic environment has become less favorable: expectations for short-term rate cuts have faded, inflation remains stubborn, the job market is weakening, geopolitical risks are rising, and consumer pressures are increasing. VCs point out that this combination of factors has led to the weak performance of most risk assets over the past two months.

Anirudh Pai, a partner at Robot Ventures, further emphasized concerns about a slowdown in the U.S. economy. Key growth indicators—including the Citi Economic Surprise Index and 1-year inflation swaps (derivatives used to hedge inflation risk)—have begun to weaken. Pai stated that this pattern has appeared before previous recession fears, fueling broader risk aversion.

CMS Holdings co-founder Dan Matuszewski stated that, aside from tokens backed by buyback mechanisms, the crypto market has seen virtually no "incremental capital inflows," with the exception of DAT (Digital Asset Treasury) companies. As new demand dries up and ETF inflows cease to provide effective support, prices are falling more rapidly.