2 December 2025

Unexplained Decline in Digital Asset Markets Amid Improving Macro Conditions
The digital asset markets have been experiencing a downturn, leaving analysts puzzled. Jeff Dorman, Co-Founder and Chief Investment Officer of Arca, stated that the current market behavior
makes little sense
given the improving macro indicators and the rising expectations for Federal Reserve rate cuts.
In his December analysis titled The Selling Nobody Can Explain, Dorman highlights the recent price weakness that contradicts historical patterns and market data. He notes that digital assets have declined in seven of the past eight weeks despite easing U.S. inflation readings and a high probability of a December rate cut. He points out the surprising divergence between equities which ended November positively and crypto markets that
fail to rally with good news.
Dorman suggests that a growing overlap between traditional finance TradFi and crypto may be contributing to the unexplained selling. He references investor Bill Ackman s comments about price correlations between crypto and unrelated assets like Fannie Mae and Freddie Mac. Dorman argues that institutional portfolio shifts outside the crypto sector may now be influencing flows in ways that are not easily observable.
Other factors mentioned include concerns surrounding stablecoin issuer Tether. Dorman cites S&P s recent downgrade and its September 2025 attestation showing 70 backing in cash and equivalents with the remainder in gold, bitcoin, and corporate loans. He asserts that liquidity fears are
misplaced
and that solvency concerns remain highly theoretical given the company s profitability.
Perianne Boring, founder and CEO of The Digital Chamber, echoed the industry s unease, stating,
When even Jeff Dorman one of the industry s most experienced investors says he can t explain what s happening, you know something is off.
She added that the situation
doesn t look organic. It looks coordinated.
In response to Boring s comments, Dorman noted that the reasons circulating around the downturn do not hold up under scrutiny. He stated,
MSTR isn t selling, Tether isn t insolvent, DATs aren t selling, NVDA isn t blowing up, the Fed isn t turning hawkish, the tariff wars aren t restarting, etc. I still have no idea why crypto is down.
Despite attempts to rationalize some downward moves, Dorman concluded that the continuing weakness
has us scratching our heads.
This emphasizes that the analysis represents his interpretation of current market dynamics.