Plain language interpretation: Why has Bitcoin fallen recently?

The recent fall of Bitcoin is not due to a single reason, but rather resembles several buckets of cold water being poured in succession, extinguishing the market's enthusiasm. Specifically, there are four key points:

1. The Federal Reserve poured a bucket of "the coldest water".

Bitcoin is now basically "eating according to the Federal Reserve's face." Previously, the market felt that there would be further interest rate cuts in December, and money would be more "loose," leading many to increase their positions in anticipation of a price rise. As a result, Federal Reserve Chairman Powell directly stated, "Don't assume that there will definitely be a rate cut in the future," and whether there will be a cut in December is still uncertain.

As soon as these words came out, everyone's optimistic expectations were directly reversed. Previously, the probability of an interest rate cut in December was almost 100%, but now it has fallen to around 60%. Coupled with the U.S. government shutdown, key economic data is unavailable, and investors are like driving with their eyes closed, unwilling to touch high-risk assets like Bitcoin, opting to withdraw funds for safety first.

2. Large institutions have begun to "run away".

Previously, Bitcoin's rise was mainly supported by large institutions. However, recently institutions have started to collectively cash out and exit, with the most obvious example being Bitcoin spot ETFs—this was the main channel for institutional entry. Last week alone saw $607 million in funds flowing out, directly wiping out the net inflow from the previous week.

From February until now, the total size of Bitcoin spot ETFs in the United States has shrunk from $40.7 billion to $35.9 billion, a loss of $4.8 billion in just one month. Products from top institutions like BlackRock are seeing capital flow out every day, and even the premiums that were previously in high demand have turned negative, indicating that both large institutions and retail investors are selling rather than buying.

3. Technical indicators "flashing red" scare off investors

People who understand market trends are all paying attention to the "death cross" signal — this occurs when the short-term price average line falls below the long-term average line, which is usually seen in the market as a signal that it is "going to fall". This time, Bitcoin has just happened to show this situation.

Moreover, key price levels are being breached one after another, falling from a high of $126,000 to around $107,000, a decline of over 15%. Technical investors see the situation and either sell quickly or dare not enter the market; with more people selling, the price naturally can't hold.

4. The hacker attack became the "last straw".

Just when the market was already panicking, the decentralized trading protocol Balancer was suddenly attacked by hackers, resulting in a total loss of $120 million. Although the officials said they would compensate, this hit everyone’s pain point – people were already worried about the technical security of cryptocurrencies, and when something actually happened, they were even more afraid to hold onto them and quickly sold to avoid risk.

This incident also triggered a chain reaction, with crypto-related stocks falling, and the confidence in the entire sector being hit. Additionally, over 310,000 people were liquidated within 24 hours, resulting in 1.2 billion dollars evaporating. The panic sentiment spread wider and wider, forcing more people to sell, creating a vicious cycle. #Gate新一期储备金报告出炉