Matrixport Investment Research: Although global liquidity improves, we still need to face market risks with caution

As the dollar weakens, liquidity indicators rebound, and marginal improvements in inflation data. Despite these positive changes, MEME Coin, once one of the strongest narratives of this bull market, still performed poorly and seemed to show no sign of recovery.

Inflation pressure leads to chain reactions in global markets

The strengthening of the U.S. labor market led to a rise in the altcoin market peaking in early December 2024. In mid-December 2024, BTC entered a consolidation phase after Fed Chairman Powell said interest rates could remain unchanged due to inflationary pressures brought by the Trump administration’s tariff policies. Although the Fed expects tariffs to have some inflationary impact, Trump’s aggressive and rapid tariff implementation has exceeded most economists’ expectations, triggering a chain effect in stocks and crypto markets.

Although the U.S. inflation report this week was slightly better than expected, it did not bring much comfort. The ongoing uncertainty surrounding trade policy still leaves the market pessimistic about the possibility of the Fed's recent easing measures.

MEME Coin has obvious consolidation, while Pump.fun's revenue has

declined significantly

For MEME Coin, signs of consolidation are very obvious. Since February, Raydium, an automated market maker based on Solana and liquidity provider for Serum's decentralized trading platform, has plummeted 71%, while Solana itself has fallen 37%.

Pump.fun is a decentralized trading platform (DEX) based on the Solana blockchain, which has become a popular platform for traders in the rapid launch, discovery and speculation of trading meme coins. The platform supports the rapid creation and trading of tokens, which often lead to extremely volatile market activities. The Pump.fun platform has generated more than $582 million in revenue over the past 12 months, making it one of the most profitable crypto projects of the cycle. However, its revenue growth has declined rapidly recently.

The altcoin market is weak, and market funds are further cautious

The weakness of the altcoin market in December and the bursting of the MEME Coin bubble in January together resulted in a decrease of $1 trillion in market capitalization – from $3.6 trillion to $2.6 trillion. This redistribution of wealth may keep investors cautious about further investment, resulting in extremely limited rebounds even driven by better inflation data. The fully realized arbitrage positions of hedge funds closing positions are the main driving force for the recent selling pressure. This expected sell-off has mostly been completed and may now be close to its highest intensity.

**Disclaimer: The market is risky, so be cautious when investing. This article does not constitute investment advice. Digital asset trading can have great risks and instability. Investment decisions should be made after careful consideration of personal circumstances and consulting a financial professional. Matrixport is not responsible for any investment decisions based on the information provided on this content. **