What Caused the Major Drop in Bitcoin
Yesterday, the funding rate for Bitcoin suddenly surged to 0.06%, which is frighteningly high. What does this indicate? Many people are rushing to go long. Among them, there are likely quite a few who were short before, and after suffering significant losses, they see the price about to break 100,000 and quickly switch to go long, only to end up getting trapped again. Both sides, long and short, have stumbled.
The unfortunate trades of these individuals directly affected the entire market. If we align ourselves with them, won't we also be unlucky? The exchanges, seeing this situation, quickly cooperated with the institutions and initiated a wave of deleveraging operations, which is how the funding rate slowly returned to 0.01%.
At this time, some people started shouting crash, crash, saying Bitcoin is finished, and even urged everyone to go short at 77,000 points. They believe that if there are more people shorting, the price will fall, 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 shout. We need to use our brains, observe how the supply and demand in the spot market are, and see what the institutions are doing, so we can have a clearer understanding.
If you want to delve deeper into the cryptocurrency world but can't find your bearings, and want to understand the information gap, whether it's contracts or spot trading, you can follow me, Jie Shao, to learn more.
