Plain language interpretation: Why has Bitcoin fallen recently?

The recent fall of Bitcoin is not caused by a single reason, but rather resembles several buckets of cold water being poured consecutively, 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 thought that there would be further rate cuts in December, and that 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 rate cuts in the future," and it's still uncertain whether there will be a cut in December.

As soon as these words were spoken, everyone's optimistic expectations were directly reversed. Previously, the probability of a rate cut in December was nearly 100%, but now it has dropped to around 60%. Coupled with the U.S. government shutdown, key economic data is unavailable, and investors feel like they are driving with their eyes closed, hesitant to touch high-risk assets like Bitcoin, preferring to withdraw investments and seek safety first.

2. Large institutions have taken the lead in "running away".

Previously, Bitcoin was able to rise mainly due to the support of large institutions. However, recently, institutions have started to collectively cash out and leave the market, with the most obvious example being the Bitcoin spot ETF — this is the main channel for institutions to enter the market. Last week, there was a capital outflow of $607 million, directly wiping out the net inflow from the previous week.

Since February, the total size of the U.S. Bitcoin spot ETF has shrunk from $40.7 billion to $35.9 billion, losing $4.8 billion in just one month. Products from leading institutions like BlackRock are seeing daily outflows, and even the premiums that were previously in high demand have turned negative, indicating that both large institutions and retail investors are selling instead of buying.

3. Technical indicators are "flashing red lights" scaring away investors.

People who understand the market are all paying attention to the "death cross" signal—where the short-term price average falls below the long-term average, which is usually seen in the market as a signal that the price is going to fall. This time, Bitcoin has exactly encountered this situation.

Moreover, the key price levels are being breached one after another, falling from a high of 126,000 USD to around 107,000 USD, a decline of over 15%. Technical investors see this situation and either rush to sell or dare not enter the market; with more people selling, the price naturally cannot 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, with total losses reaching 120 million USD. Although the official statement said they would compensate, this hit everyone’s sore spot – already worried about the technical security of cryptocurrencies, when something really happened, no one dared to hold on to them and quickly sold them off to avoid risks.

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, with 1.2 billion dollars evaporating, and the panic sentiment spreading wider, forcing more people to sell off, creating a vicious cycle. #Gate新一期储备金报告出炉