What caused the sharp drop in Bitcoin
Yesterday, the funding rate for Bitcoin suddenly soared to 0.06%, which is alarmingly high. What does this indicate? Many people were rushing to go long. Among them, there are likely quite a few who were previously short, and having suffered enough losses, they saw the price about to break 100,000 and quickly flipped to go long, only to find themselves trapped again; both longs and shorts ended up stumbling.
These unfortunate trades directly affected the overall market. If we stand with them, won’t we also be unlucky? The exchanges, seeing this situation, quickly collaborated with institutions to initiate a wave of deleveraging operations, which gradually brought the funding rate back down to 0.01%.
At this point, some people began to shout about a crash, saying Bitcoin is finished, and even urged everyone to go short at 77,000 points. They believe that if there are more short sellers, the price will drop, without considering the situation in the spot market. In reality, we all know how much inventory those large institutions hold; no matter how much you shout about a crash, the institutions won’t listen to you.
Therefore, when we look at the market, we can’t just listen to those who are shouting; we need to use our own brains to see how the supply and demand in the spot market are, and what the institutions are doing, so that we can have a sense of certainty.
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