Replay Bitcoin’s roller coaster crash: Who directed the crash of more than 370,000 accounts?

This time, it is estimated that many people have liquidated their positions. A Bitcoin investor stated at 19:00 on February 23, the price of Bitcoin fell to around US$48,723, a drop of more than 20% within 24 hours. This means that on the evening of February 22, many retail investors who bought the bottom of Bitcoin near US$50,000 were in a dilemma of loss, and even some retail investors with high leverage were facing a storm of liquidation. According to data, within the 24 hours before 19:00 on February 23, a total of more than 370,000 Bitcoin accounts suffered liquidation, with the liquidation amount exceeding US$2.7 billion. Many people in the crypto industry believe the sharp decline of Bitcoin mainly due to the speech of the US Treasury Secretary who stated that Bitcoin is highly speculative. Her remarks caused many institutional investors to worry about Bitcoin facing stricter supervision and collectively selling.

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The chief researcher of OKEx, William believes that another reason for Bitcoin’s sharp drop is that Bitcoin has accumulated a large amount of profit after reaching new highs. They are extremely sensitive to the risk of market price fluctuations. Once they find that Bitcoin’s regulatory policies have become stricter or the price has increased significantly, they will quickly make a profit and exit, which further amplifying the Bitcoin’s decline.

“However, the biggest fuse that triggered this round of Bitcoin’s sharp decline was that after Bitcoin was included in the asset allocation of institutional investors, its price fluctuations were increasingly affected by the external environment,” pointed out by a Wall Street hedge fund manager on the evening of February 22. For example, as the U.S. 10-Year Treasury Bond continues to rise, it is driving more Wall Street investment institutions to sell high-valued U.S. stocks and Bitcoin, and then invest their funds in bond assets instead. In his view, Bitcoin has staged a sharp roller coaster market in the past 24 hours, which just reflects a fierce long-short exchange between institutions and retail investors. However, due to the fact that it is difficult for retail investors to resist the institutional selloffs, Bitcoin cannot escape the plunge.

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“The institutions are institutions.” Previously, Bitcoin continued to soar mainly due to the entry of institutional investors. Now, when institutional investors decide to leave the market at a profit, Bitcoin will inevitably have a “return of value.” However, retail investors who hope to invest in Bitcoin to become rich overnight have unfortunately become the last takers.

After Yellen’s speech, many people foresee that Bitcoin will usher in a wave of correction. “However, on the evening of February 22, Bitcoin fell all the way from US$57,000 to US$49,000. Such a drop was beyond my expectation,” he recalled. When Bitcoin once fell below US$50,000, he received a message from the crypto exchange to increase the trading margin. If the margin cannot be called on that night, his Bitcoin account will be forced to liquidate and stop the loss the next day .

Many people cannot figure out who directed the Bitcoin crash on the evening of February 22. The reporter found out from various sources that the main force behind the sale of Bitcoin that night came from the Wall Street hedge funds. The reason is that rising of the U.S. Treasury Bond has caused inflationary trading to heat up, making them choose to sell Bitcoin on rallies to make profits.

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Many people believe that, “However, Bitcoin is sought after by institutional investors precisely because they regard Bitcoin as a new tool to fight inflation. Therefore, the rise in inflation trading should benefit Bitcoin.” However, he learned from many crypto exchanges that the investment logic of Wall Street investment institutions is just the opposite, they believe that higher U.S. bond yields and rising inflation trading will trigger the Fed to tighten the monetary policy in advance. Hence, benefiting from monetary easing, the rising US stocks and Bitcoin suddenly became their main targets for selling.

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