1. Who is selling Bitcoin?
The crypto market has recently experienced a big shock, with mainstream cryptocurrencies such as Bitcoin falling. Many people may ask: "Who is selling Bitcoin?" In fact, the reason behind this is not simple, but a variety of factors intertwined to form a "perfect storm."
First, the performance of economic data exceeded expectations, which brought considerable pressure to the market. For example, the JOLTS job vacancy data was significantly higher than expected, reaching 8.098 million, a six-month high. This shows that the job market is still strong, the unemployment rate is expected to fall further, and jobs will increase accordingly. The prosperity of the job market tends to drive consumption growth, which in turn drives the overall economy upward. In this way, investors may transfer funds from the riskier crypto market to the relatively stable real economy, triggering a sell-off of cryptocurrencies such as Bitcoin. 
For example, the ISM Non-Manufacturing PMI data also exceeded expectations, reflecting an expansion trend in economic activity. As a significant component of the economy, the rise in the PMI index for the non-manufacturing sector indicates a strong upward momentum in the economy and a positive outlook for corporate profits. In this case, investors are more inclined to invest in the real economy to obtain stable returns rather than risk investing in the highly volatile cryptocurrency market.
2. The 'Shadow' of Federal Reserve Interest Rate Hike Expectations
In addition to the impact of economic data, the rising expectations of interest rate hikes by the Federal Reserve are also one of the important reasons for the decline in the crypto market. Strong economic data has reduced the likelihood of rapid interest rate cuts by the Federal Reserve, with the market expecting that the Fed may only cut rates twice or even less, and there is even a possibility of further rate hikes. This expectation has increased the cost pressure of funds in the market, raising uncertainty for investors regarding the future economic situation, which in turn leads to fluctuations in market sentiment.
In particular, the rise in the 10-year U.S. Treasury yield has further intensified market tensions. The increase in bond yields indicates a higher demand for bonds, and there exists a certain 'teeter-totter effect' between bonds and risk assets like cryptocurrencies. When bond yields rise, funds tend to flow from risk assets to the bond market, thereby suppressing the valuation of cryptocurrencies.
3. The 'Butterfly Effect' of Market Sentiment
The 'overly strong' economic data and the rising expectations of interest rate hikes by the Federal Reserve have jointly triggered intense fluctuations in market sentiment. On one hand, the increased risk of tightening liquidity has led investors to lose confidence in holding risk assets such as crypto assets, prompting a wave of selling to avoid risk. Below are the selling conditions from last night:
On the other hand, the uncertainty regarding future macro policies (slow interest rate cuts or the possibility of rate hikes) has heightened risk-averse sentiment, exacerbating market sell-offs and further driving down cryptocurrency prices.
In summary, the better-than-expected economic data and rising interest rate hike expectations are the core reasons for the overall decline in the crypto market. Although the crypto market may face some challenges in the short term, in the long run, as the market continues to mature and investors' understanding of cryptocurrencies improves, cryptocurrencies still have broad development prospects. Investors should remain rational in the face of market fluctuations, manage risks well, and seize investment opportunities.
The above content is for reference only and does not constitute investment advice.
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