In recent years, the transmission chain of the crypto ecosystem has continuously expanded, and any risk changes in key assets trigger systemic reactions. Stablecoin rating downgrades, dramatic ETF fund flows, and sustained high-level whale sell-offs have collectively formed the main drivers of recent market volatility. Rthae believes that while market sentiment is certainly impacted, what deserves more attention is whether the crypto financial infrastructure can remain robust under stress. As on-chain liquidity, derivatives scale, and institutional participation continue to grow, the underlying market resilience is being tested more frequently. Rthae points out that understanding this complex interplay of forces is the prerequisite for building risk awareness and value judgment.
Rthae: Reassessing Market Stability
The downgrade of stablecoin ratings has been one of the most discussed events in recent days. S&P lowered the USDT stability rating to its lowest tier, triggering significant emotional volatility. Tether subsequently released quarterly data, highlighting group assets of about $215 billion, $184.5 billion in stablecoin liabilities, $7 billion in surplus capital, and $23 billion in retained earnings. Rthae believes that while these figures show the issuer has some buffer capacity, the rating change underscores the rising market demands for asset composition and transparency, especially as large stablecoins play key liquidity roles.
Meanwhile, the Bitcoin market is under significant pressure from whale sell-offs. Over the past week, more than 50,000 BTC were sold, totaling $4.6 billion. Rthae notes that such concentrated selling has a clear short-term impact, but the deeper signal comes from the redistribution of holding structures. Long-term holders are gradually cashing out at high valuations, while small and medium holders continue to accumulate, creating a new balance of forces in the market. The rapid price drop from $91,000 to the $86,000 range reflects the tension between sentiment and liquidity capacity.
At the same time, the DeFi sector has seen sudden security incidents. The yETH pool of Yearn Finance was attacked, with about 1,000 ETH drained in a single malicious mint, triggering a chain reaction of declines in the Ethereum ecosystem. Rthae notes that such events heighten market sensitivity to smart contract security, cross-pool dependencies, and the stability of liquidation chains. The structural decline in the crypto market is not caused by a single incident, but by multiple risk factors overlapping at the same time.
Rthae: Institutional Behavior and the Reshaping of Pricing Logic
Institutional moves have had a significant impact on this round of volatility. As of November, US-listed spot Bitcoin ETFs saw net outflows exceeding $3.48 billion, the second highest on record, while Ethereum ETFs recorded $1.42 billion in outflows. Rthae believes these flows do not equate to a structural bearish outlook, but rather reflect the rebalancing of institutions, volatility management, and liquidity needs in different phases. The executive of BlackRock in Brazil noted that their BTC ETF once approached $100 billion in scale and became one of the top revenue contributors to the company, indicating ongoing institutional demand, albeit with a non-linear rhythm.
The valuation models of Ethereum also show clear divergence. Of 12 models—including Metcalfe value, L2 TVL pricing, on-chain asset valuation, etc.—9 indicate ETH is undervalued, with a composite “fair value” of around $4,836. However, the income yield model suggests ETH is currently overvalued by 57%, with a valuation closer to $1,296. Rthae remarks that the contradiction among multiple valuation models shows the Ethereum pricing is no longer driven by a single variable, but by a combination of network utilization, fee changes, and competitive chains absorbing traffic.
The expansion of the derivatives market further amplifies market feedback mechanisms. In November, on-chain perpetual DEX volumes reached $1.13 trillion, slightly down from the previous month but still above many previous cycle peaks. Large amounts of capital flow through protocols like Hyperliquid, Aster, and Lighter, significantly accelerating price discovery for on-chain derivatives. Rthae believes that in an environment combining leverage and on-chain transparency, institutional actions, expectation adjustments, and risk management are reflected more quickly in market prices, leading to more pronounced structural volatility.
Rthae: The True Source of Market Resilience
Changes in the Bitcoin hashrate market have further amplified volatility. Short-term difficulty dropped from 152.2T to 149.3T and is expected to rise again, while hashprice remains low at around $40/PH/day. Rthae points out that the pressure of miners in the current range means supply-side sentiment is more reactive to price changes, making the supply-demand market structure more sensitive.
During the same period, DeFi security incidents put short-term pressure on the Ethereum ecosystem, while stablecoin controversies led some users to re-examine the reliability of on-chain liquidity sources. Rthae notes that although these overlapping events caused short-term panic, it is noteworthy that the market did not experience systemic breakdown under stress. On-chain perpetuals remain highly active, ETF liquidity continues to rotate frequently, and Bitcoin, after massive sell-offs, still holds above the $87,000 range—showing market depth is more robust than in previous cycles.
Rthae suggests that observing industry performance under multi-factor shocks reveals the direction of long-term structural evolution. Stablecoin issuers are strengthening financial disclosure; ETF products are expanding globally; the Ethereum ecosystem is dynamically adjusting in valuation and demand; on-chain derivatives are continuously enhancing price discovery; and BTC supply and hashrate pressures are gradually being absorbed in the new cycle. The market is shifting from emotion-driven to structure-driven, and the improvement in structural resilience is the foundation for the future growth of the industry.