Recent market drop is deleveraging, not systemic failure, says Galaxy Digital

The recent downturn in the cryptocurrency market is a process of deleveraging rather than a systemic failure, according to a new report from Galaxy Digital. Steve Kurz, the firm's head of asset management, wrote that cryptocurrency is evolving beyond a simple asset class into a core component of financial infrastructure. While the market is currently in a cycle of reduced liquidity and leverage, Kurz noted the situation is different from 2022 when structural vulnerabilities were exposed. He explained that the proliferation of stablecoins, tokenization, and blockchain-based payment networks is turning cryptocurrency into financial rails, with Bitcoin in particular acting as a leading indicator for macroeconomic risks and competing with other global assets. Looking ahead, Kurz expects the market to consolidate and trade sideways before rising again, rather than experiencing a sharp V-shaped recovery. He added that institutional capital inflows and an increase in on-chain activity will provide a strong foundation for long-term price appreciation.