The market is actively searching for the cause of this recent crash, with Wintermute strategists believing that this crypto winter will thaw faster.

BlockBeats News, February 7th. Bitcoin experienced its most severe weekly drop in over three years. But for some crypto die-hards, including the biggest and most well-known bulls, the worst part is that they are not exactly sure of the precise reason for the crash.

Crypto merchant bank and trading firm Galaxy Digital's head Michael Novogratz stated that there are various market theories about this selloff, ranging from investors shifting to prediction markets and other high-risk bets, to a widespread profit-taking after a fiery bull market, with no definite spark.

Here are several mainstream analyses of the current market:

· Emergence of new trends: Prediction markets, gold, silver, artificial intelligence, and so-called Meme stocks have recently been vying for traders' attention, diverting focus from cryptocurrency. In the past, Bitcoin was the consensus choice for an asymmetric bet; now, there are artificial intelligence, prediction markets... and many other areas for people to speculate in.

· Possible increase in supply: Wall Street is attempting to capitalize on the popularity of cryptocurrency by introducing Bitcoin ETFs, tokenized products, and derivatives. Their surge may not affect the absolute number of tokens like Bitcoin, Ethereum, etc., but some investors believe their emergence has weakened Bitcoin's attractiveness as a scarce asset. Some analysts state that by introducing ETFs and complex derivatives, Wall Street allows investors to bet on the price of Bitcoin without needing to buy or hold the actual tokens.

· New regulatory expectations: Some investors speculate that Trump's nominated next Fed chair, Kevin Warsh, may have led to the drop in crypto prices. Warsh is seen as more hawkish on using interest rates to suppress inflation and more supportive of a strong dollar. Higher rates and a stronger dollar typically harm alternative assets like gold and crypto, reducing their appeal to investors.

· Stalled CLARITY Act: The proposed CLARITY Act aims to establish a clear regulatory framework for the burgeoning industry. However, a dispute between exchanges and traditional banks has stalled this momentum. Without this measure, many financial firms are hesitant to integrate digital assets into their business. Unless a compromise is reached, this dispute could deprive the crypto market of a catalyst that could have sustained its upward momentum.

· Pure profit-taking: Novogratz and some other investors believe that the selloff was largely driven by investors eager to lock in profits. These profits were accumulated during the FOMO frenzy in 2024 when Trump was elected and pledged to make the U.S. the world capital of cryptocurrency, accompanying the rise of Bitcoin, Ethereum, and other digital tokens.

Some analysts believe that this crypto winter may thaw faster than past ones. There have been no major company collapses or legal charges, which have sparked confidence crises in previous crashes. For believers, Friday's rebound reinforced their conviction that crypto always bounces back, a key reason why they stay invested. "The infrastructure is stronger, stablecoin adoption is growing, institutional interest has not disappeared, just temporarily paused," said Jasper De Maere, a strategist at crypto trading firm Wintermute, noting that interest in these investments "can come back quickly."