Who made Bitcoin "walk off the altar"?

As of 19:00 on June 20th, the trading price of Bitcoin hovered around $20846.2, gradually moving away from the intra-year low of $17630

As of 19:00 on June 20th, the trading price of Bitcoin hovered around $20846.2, gradually moving away from the intra-year low of $17630.5 set last Friday and temporarily regaining the integer level of $20000.

However, this may not necessarily reverse the current sluggish popularity of the Bitcoin market, "a crypto digital asset investment institution official told reporters. As the Federal Reserve continues to raise interest rates by 75 basis points in a single round in the future, various investors on Wall Street are still selling risky assets, including US stocks and Bitcoin, at no cost; And due to the impact of Bitcoin falling below $20000 last week, it is still in a new round of explosive positions.

According to the latest data released by Coinglas, as of 8:00 pm on June 19th, a total of 150000 people in the field of encrypted digital assets have experienced a sell-out in the past 24 hours, with a total amount of $567 million.

It is worth noting that Bitcoin once fell below $20000, which means that over the past seven months, the price of Bitcoin has plummeted by about 70% from its historical high of $69000 set in November 2021.

This cryptocurrency investment institution official told reporters that the deep reason for Bitcoin's sharp decline is the recent series of risk events in the cryptocurrency asset field, which has caused Bitcoin to face a huge liquidity crisis.

Nowadays, some investors believe that the crypto digital asset market is facing a new Lehman moment, "a Wall Street hedge fund manager told reporters. But compared to the trillions of dollars spent by global central banks in 2008 to rescue the subprime crisis that broke out due to the collapse of Lehman Brothers, the liquidity crisis of encrypted digital assets has not been helped.

Several family office heads have revealed to reporters that since last week, they have been quickly clearing their holdings of cryptocurrency and other digital assets at the request of wealthy individuals, who are concerned that Bitcoin will face greater selling pressure due to the liquidity crisis and ultimately fall below the integer level of $10000.

Billionaire Jeffrey Gundlach, known as the 'new debt king', bluntly stated that he wouldn't be surprised if Bitcoin fell to $10000.

The Wall Street hedge fund manager revealed to reporters that although Bitcoin rebounded on June 20th, many highly leveraged investors are reducing their holdings to avoid the risk of exposure. To some extent, the Federal Reserve's sustained and significantly higher than expected interest rate hikes may give Bitcoin a "fatal blow" - it forces many highly leveraged investors to bear the dual blow of the sharp drop in Bitcoin prices and the sudden increase in leveraged financing costs, forcing them to stop losses and leave the market faster, putting Bitcoin under greater downward pressure.

Undoubtedly, encrypted digital assets such as Bitcoin have become one of the biggest victims of the Federal Reserve's violent interest rate hikes, "he admitted.

Bitcoin's relentless decline

At present, it is widely believed in the industry that a series of risk events since June are the "products" of the sharp drop in Bitcoin prices, including the decision of Celsius, a billion dollar cryptocurrency digital asset lending platform, to suspend withdrawals, transactions, and transfers; Three Arrows Capital, a cryptocurrency hedge fund, is considering selling assets and seeking a rescue plan due to its failure to meet margin requirements; Cryptocurrency lending institution PayPal Finance announced a freeze on all account withdrawals.

In addition, the third largest stable currency in May, UST, suddenly decoupled from the US dollar, and now the crypto digital asset market has become increasingly weak. Any negative event will be magnified, causing Bitcoin to quickly decline to $15000, "he pointed out.

Several insiders in the cryptocurrency industry have stated that this phenomenon is extremely unusual. In the past, when Bitcoin plummeted, these long-term and determined holders either stood still and waited for a rebound, or took dips to support Bitcoin. But their resolute departure this time highlights that their investment confidence in encrypted digital assets is undergoing a 180 degree transformation.

In the view of the Wall Street hedge fund managers mentioned above, these long-term determined investors have a sudden change in mentality, or there is a high correlation with the Federal Reserve's continued significant interest rate hikes leading to the US stock market falling into a bear market. Due to the positive correlation of over 35% between Bitcoin and the US stock market, as long as the bull market situation in the US stock market continues, these investors have enough confidence to continue to be bullish on Bitcoin for the long term; But now the S&P 500 index and others have fallen into a bear market, forcing them to completely change their bullish attitude towards the Bitcoin.

Journalists have learned from multiple sources that more and more Wall Street investment institutions are now anticipating a sudden increase in the probability of triggering the "Lehman moment" in the crypto digital asset market. Especially after the crypto digital asset lending platform Celsius decided to suspend withdrawals, transactions, and transfers, they expect more and more investors to accelerate the pace of redeeming various types of digital crypto assets, selling and hedging, causing the entire crypto digital asset investment confidence to completely "collapse".

This will further shake the foundation of the development of encrypted digital assets, "admitted the head of asset allocation at a large Wall Street asset management institution. Faced with the increasingly strict regulation of global crypto digital assets in recent years, Bitcoin is still highly sought after by many investors. One important reason is that they uphold a strong belief that crypto digital assets will continue to thrive. If Bitcoin encounters a liquidity crisis and this belief "fades", crypto digital assets may face a "catastrophic disaster".

In his view, the entry of funds for bottom hunting on June 20th is indeed commendable, but it may not be able to effectively turn the tide. Because as long as the Federal Reserve continues to raise interest rates significantly beyond expectations, the continuous correction in high-risk asset valuations will still comprehensively suppress Bitcoin valuations.

More importantly, in June last year, the market continued to speculate that Bitcoin was one of the best safe haven assets to fight high inflation, but now this sound has suddenly disappeared, perhaps indicating that the last bulls have also disappeared, "said the head of asset allocation at a large Wall Street asset management firm.

Investment institutions quickly leave to avoid stepping on lightning

In the eyes of many industry insiders, another important factor that has forced Bitcoin to experience a sharp decline is the dissipation of profit making effects and the sudden increase in risk of lightning strikes, which have led to the rapid departure of a large number of institutional investors.

The head of a family office in the Asia Pacific region revealed to reporters that last week they cleared their holdings of encrypted digital assets in their family asset portfolio in response to urgent requests from multiple wealthy clients. Previously, Bitcoin accounted for over 5% of their entire investment portfolio.

Behind this is a series of risk events that have made wealthy individuals no longer pursue profits crazily, but consider quickly and wisely protecting themselves, "he analyzed. In the past, wealthy clients would require them to "lend" Bitcoin from their investment portfolios to cryptocurrency lending platforms, earning a risk-free return of over 12% annually. However, with the decision of the billion dollar cryptocurrency lending platform Celsius in early June to suspend withdrawals, transactions, and transfers, these billionaires suddenly realized that this investment could "lose their wife and lose their soldiers" - neither receiving substantial interest, It has also caused a large number of Bitcoin assets to lose their assets and demanded urgent redemption of Bitcoin, selling and cashing out "for safety".

Not only the family office, but also some bank investment institutions involved in lending and profiting from encrypted digital assets have taken similar emergency hedging measures, "the head of the family office in the Asia Pacific region told reporters. After all, no one is willing to face the risk of new investment stepping on thunder.

Reporters have learned from multiple sources that another trigger that has forced a large number of investment institutions to withdraw from the Bitcoin market at no cost is Three Arrows Capital, which is seeking a rescue plan due to its inability to pay trading margins.

Last Friday, Kyle Davies, the co founder of this hedge fund, which mainly invests in crypto digital assets, bluntly stated that they have hired lawyers and financial advisors to help investors and lenders find solutions, including selling assets and receiving assistance from another investment institution, after they suffered heavy losses due to the sharp drop in crypto digital asset prices and faced the risk of mandatory liquidation due to failure to meet margin calls.

However, the market generally expects that even if the rescue plan is quickly formed, as long as the prices of encrypted digital assets continue to fall, Sanjian Capital will still face huge investment losses, causing a large number of investors to suffer significant losses. "The aforementioned Wall Street hedge fund manager pointed out to reporters. This has led more and more high net worth investors to face the huge investment risks of encrypted digital assets, either suspending their investments or urgently redeeming their funds for safe haven.

In the view of multiple insiders in the cryptocurrency industry, these risk events may have an incalculable negative impact on the popularity of Bitcoin investment. The reason for this is that over the past three years, Bitcoin has rapidly risen to new highs, driven by the influx of a large number of institutional investors seeking profits. Now they are accelerating their departure, undoubtedly declaring that encrypted digital assets have "taken off the altar".

Behind this, it is still capital profit seeking that plays a huge role. In the past three years, a large number of investment institutions have been enthusiastic about cryptocurrency and other digital assets, mainly because of their extremely rich profit making effects. Nowadays, when the price of Bitcoin plummets, various profit making effects are no longer popular, investment institutions naturally avoid them, and even consider cryptocurrency assets as new investment minefields. "This Wall Street hedge fund manager admitted. This means that those who stay behind with encrypted digital assets need to be mentally prepared for the 80% -90% drop in Bitcoin.

The question is how many investors can survive the harsh winter of cryptocurrency assets, and even if Bitcoin rebounds in the future, facing the sharp rise and fall of cryptocurrency assets, how much capital is willing to make a comeback and lick the blood is unknown, "he pointed out.

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