Federal Reserve Governor Christopher Waller stated on Monday that the optimistic market sentiment which surged following the election of Donald Trump is now fading as recent sell-offs impact crypto assets. Waller attributed the recent sharp volatility to regulatory uncertainties and risk management adjustments by major financial institutions. He pointed out that while price fluctuations are typical for the crypto market, the current volatility underscores the sector's deep entanglement with the traditional financial system. As institutional capital from hedge funds, trading desks, and exchange-traded funds (ETFs) continues to flow in, crypto assets are no longer just a niche market dominated by retail investors, leading to increased policy-level attention. In market terms, Bitcoin has retreated more than 40% from its October peak. Last week, it fell to $60,033, hitting its lowest level since October 2024 and triggering the largest spike in volatility since the collapse of FTX in 2022. Although it subsequently rebounded to around $70,000, derivatives markets continue to signal caution. Data shows that the funding rate for Bitcoin perpetual contracts remains in negative territory, reflecting traders' defensive positioning against downside risks or their demand for additional compensation to hold long positions. Meanwhile, open interest, which began declining in October, has not recovered and is down approximately 50% from its peak, indicating a lack of strong consensus behind the current rebound. The options market also exhibits caution. Bitcoin's implied volatility has decreased from around 83% last Thursday to about 60% currently, suggesting reduced expectations for sharp short-term moves. However, the 25-delta skew remains significantly tilted toward put options, indicating sustained high demand for downside protection. Industry insiders note that while reduced leverage may help lower volatility and stabilize prices, it also suggests that many investors are choosing to take profits or cut losses at lower levels, shifting to a wait-and-see approach or even temporarily exiting the market. Macro-level uncertainties are further reinforcing cautious sentiment. Market participants are facing a concentration of potential disruptors, including political changes in Japan, fluctuations in precious metal prices, and questions about the sustainability of the AI-driven rally in U.S. stocks. Amid these intertwined risks, analysts believe the current market, dominated by bearish sentiment, is more likely to enter a phase of consolidation and fluctuation rather than experience a rapid reversal upward.