The cryptocurrency market experienced a significant correction today, with the prices of major digital assets generally declining. Bitcoin fell more than 1%, while Ethereum dropped over 2.5%, and some small market capitalization tokens saw declines of more than 3%.

This phenomenon has sparked widespread discussion among market participants. Some believe that under the ongoing inflationary pressure, Bitcoin should be favored as a safe-haven asset, but the reality is quite the opposite. So, does this signal that the crypto market is about to face a more severe adjustment?

Analysis indicates that this round of fall is primarily due to the gap between market expectations and actual conditions. Previously, investors generally expected the Federal Reserve to start cutting interest rates in the second half of the year, leading to a large amount of capital being allocated to high-risk assets such as Bitcoin in advance. However, the Federal Reserve's latest statement remains cautious and highly vigilant about inflation issues, which has resulted in a significant deviation from market expectations, causing some investors to exit in disappointment.

Although Bitcoin has long been seen as a tool against inflation, it is still classified as a high-risk asset in the short term. In the current economic environment of high interest rates and a strong dollar, investors tend to reduce their holdings of encryption assets and instead pursue the safety of cash or dollar assets.

In addition, the technical breakthroughs have triggered the execution of some automatic stop-loss orders. Coupled with factors such as ETF fund outflows and the traditional trading off-season in August leading to insufficient market liquidity, these have collectively intensified the recent market volatility.

In the face of the current market environment, investors need to remain calm and closely monitor the direction of global economic policies and their potential impact on the encryption market. At the same time, it is important to recognize the high volatility characteristics of the cryptocurrency market and manage risks effectively.