Exploring the logic behind the plunge in Bitcoin prices

Recently, Bitcoin prices have experienced a sharp decline, which has attracted widespread attention. The main reasons are as follows:

First, strong US employment data has led the market to expect that the Federal Reserve is more likely to raise interest rates. This is bound to push up interest rates and have a negative impact on the cryptocurrency market, which has always been regarded as an "inflation hedge". The sharp decline in mainstream digital currencies such as Bitcoin and Ethereum reflects investors' concerns about the shift in monetary policy.

Second, the continued decline in "meme stocks" such as GameStop has also had a cascading impact on the sentiment of the entire cryptocurrency market. There is a certain correlation between these assets, and investors tend to regard them as similar "risk assets". When traditional stock markets adjust, cryptocurrencies are often implicated.

Third, from a technical perspective, Bitcoin's market dominance has rebounded, reflecting that selling pressure is concentrated on altcoins such as altcoins. Although the sentiment of cryptocurrency traders is still classified as "greedy", some investors may have begun to take profits and avoid risks.

In addition, the decline in open interest in Bitcoin futures also shows that traders are gradually closing their positions. This may mean that the current market's confidence in Bitcoin is gradually recovering.

Combining the above factors, we can see that there is a more complex logic behind the plunge in Bitcoin prices. This not only reflects the impact of monetary policy changes on the cryptocurrency market, but also reflects the interrelationship of the entire risk asset market sentiment. How it will evolve in the future is worth our continued attention.