Look, to understand the downturn in the crypto market, check out that phase in September 2024 when Bitcoin was in a heavy sell-off. For me, it was essential to understand because market dynamics changed from that point onward. At that time, Bitcoin $58K went down, and it wasn't just an isolated move – four times in one month, this critical support level started breaking.

The thing is, the crypto market decline was closely aligned with the stock market. The Magnificent 7 stocks erased $550 billion in market cap, and mega-cap stocks like Nvidia experienced record daily losses. This was a contagion effect – when traditional markets fall, risk assets are hit first, and crypto is the most sensitive.

Looking at macro factors, it becomes clear why the crypto market was down. The Bank of Japan raised interest rates, there was pressure from Fed rate hikes, and US jobs reports were weak. In July, unemployment rose from 4.1% to 4.3%, which scared the markets. When central banks keep tight monetary policy, risk-on assets come under pressure.

In August, Bitcoin saw an 8.6% loss, and September is historically the worst month for crypto – averaging a 4.5% downside. But the key point was that the Crypto Fear & Greed Index was at 27, meaning investors were still waiting for a recovery.

Fast forward to today – Bitcoin is trading above $78K, which $58K is a significant recovery. This shows that when the Fed eventually signaled rate cuts (a 25 basis point cut was expected in September 2024), the crypto market bounced back strongly. Macro conditions improved, and risk appetite returned.

So essentially, the crypto market declines when central banks are hawkish, unemployment rises, and the fear index is high. But in the long term, when monetary conditions ease, crypto also recovers strongly. This cycle has been repeatedly observed in the market.

Disclaimer: Do your own research, I am not a financial advisor. Crypto is a volatile asset, invest with understanding of the risks.