Plain language interpretation: Why has Bitcoin fallen recently?

The recent fall of Bitcoin is not caused by a single reason, but rather feels like several buckets of cold water poured together, extinguishing the market's enthusiasm. Specifically, there are four key points:

1. The Federal Reserve threw a bucket of "the coldest water".

Bitcoin is now basically "eating based on the Federal Reserve's mood." Previously, the market thought there would be further rate cuts in December, and money would be more "loose," with many people adding to their positions in anticipation of price increases. As a result, Federal Reserve Chairman Powell directly said, "Don't assume there will definitely be rate cuts in the future," and it's still uncertain whether there will be a cut in December.

As soon as these words were spoken, everyone's optimistic expectations were immediately reversed. Previously, it was thought that the probability of a rate cut in December was nearly 100%, but now it has fallen to around 60%. With the U.S. government in a shutdown and key economic data unavailable, investors feel like they are driving with their eyes closed. They are hesitant to touch high-risk assets like Bitcoin, choosing to withdraw funds and avoid risks first.

2. Large institutions have started to "run away".

Previously, Bitcoin was able to rise mainly due to the support of large institutions. However, recently institutions have begun to collectively cash out and leave the market, with the most obvious example being the Bitcoin spot ETF—this was the main channel for institutions to enter the market. Last week alone, there was $607 million in funds flowing out, directly wiping out the net inflow from the previous week.

From February to now, the total scale of Bitcoin spot ETFs in the United States has shrunk from 40.7 billion dollars to 35.9 billion dollars, with a loss of 4.8 billion in just one month. Products from leading institutions like BlackRock are seeing funds flowing out daily, and even the premiums that were once eagerly bought have turned negative, indicating that both large institutions and retail investors are selling rather than buying.

3. Technical indicators are "flashing red lights" scaring away investors

People who understand the market are all focused on the "death cross" signal - this means that the short-term price average has fallen below the long-term average, which is usually seen in the market as a signal that it "will fall". This time, Bitcoin happened to show this situation.

Moreover, key price levels have been breached one after another, falling from a high of 126,000 dollars to around 107,000 dollars, a drop of over 15%. Technical investors see this situation and either rush to sell or dare not enter the market. With more people selling, the price naturally cannot hold up.

4. The hacker attack became the "last straw".

Just when the market was already panicking, the decentralized trading protocol Balancer was suddenly attacked by hackers, resulting in total losses reaching 120 million dollars. Although the official statement said they would compensate, this hit everyone’s pain point – they were already worried about the technical security of cryptocurrencies, and when something really happened, they were even more afraid to hold on to them and quickly sold to avoid risks.

This incident has also triggered a chain reaction, with crypto-related stocks following the fall, and the confidence of the entire sector has been impacted. In addition, over 310,000 people have been liquidated within 24 hours, leading to a loss of 1.2 billion dollars. The panic sentiment is spreading wider and is forcing more people to sell off, creating a vicious cycle. #Gate新一期储备金报告出炉