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After a week of large fluctuations, Many BTC investors have lost a lot of money this week. I don’t know if retail investors have any money to speculate on BTC. If there is no money, capital giants will not play with them. In the past week, due to the tightening of BTC policies in China and other countries, BTC has generally been negative in terms of policy. This is also the main reason for BTC's downward trend this week. In fact, it is not just BTC, the entire cryptocurrency market is now in a disadvantageous position, and it is no exaggeration to say that it is full of bubbles.
Even the founder of Ethereum, Vitalik Buterin, said in an interview: "The crypto market is in a bubble." However, on the issue of the BTC bubble, Vitalik Buterin only implicitly expressed his concern, and did not make it clear whether the current price of BTC is reasonable. In fact, the entire cryptocurrency market, including BTC and Ethereum, is difficult to clearly define the bubble. It can only be said that they have the risk of bubble bursting.
Take BTC, for example, if the capital giants are speculating in the long-term, and will not sell the BTC in their hands. Then the consensus system established by BTC around capital giants is not a bubble. The consensus system is the value of BTC. But no one can guarantee when the capital giants will give up BTC, such as learning from Musk and turning to speculate Doge. Without the support of capital giants, BTC's consensus system will collapse, and BTC is the biggest investment bubble of this century.
BTC contract size decreases, BTC will return to the main line of value investment?
No one knows what the capital giants think, and no country or company is willing to give BTC to the bottom, so the future of BTC is full of unknowns. But the unknown price trend has also become one of BTC's biggest advantages. Around the characteristics of BTC's skyrocketing and plummeting, a large number of speculators have appeared, all wanting to take a share of BTC's volatility. The risks of BTC are huge, and the corresponding returns are huge, especially in the futures contract market. In the contract market that can even reach one hundred times, the greedy side of human nature is fully revealed, and they feel that they are not the taker.
There has always been controversy over the existence of leveraged funds. Some people say that it is a shortcut to get rich, while others say that it is a bridge to hell. In short, adding leverage to speculate BTC has great risks and benefits, and it is not affordable for ordinary people, so it is not recommended that everyone speculate BTC. On May 21st, while browsing the BTC news, I found an interesting thing. When statistics on BTC contract data, some people found that the scale of BTC contract decreased significantly in the past two days, thinking that this is good news for BTC.
Some people think that BTC investors are rational, which is conducive to the return of BTC to the right path of value investment, and they are optimistic about the future trend of BTC in the long term. Some people understand that the reason for the reduction in the size of BTC contracts is that investors are no longer interested in BTC contracts. Tellurian’s Bonnefous said: “A lot of leverage has stopped and the market is much cleaner. This should lay the foundation for recovery.” But my understanding of this news is completely different from them. I think this is one of the bad news for BTC. It is not conducive to the next development of BTC.
Although there are many retail investors, they can't stand the harvest of capital giants
The reason why the BTC contract market has decreased in the past two days is that a large number of contract users have already liquidated their positions, and they may not have the money to increase leverage to speculate on BTC. Although there is no specific data on BTC liquidation this week, I estimate that the entire BTC contract market will have close to 40 billion liquidation funds within this week. Especially on May 19th, BTC quickly dived below the $30,000 mark, making many contract users unexpected. Coupled with the "unexpected" power outages of some trading institutions, some users of low-leverage funds have also been liquidated when there is no time to make a margin call.
BTC leveraged contracts are liquidated. Unlike users who speculate on real currencies, there is a chance that BTC prices will fall back. If the BTC leveraged contract hits the liquidation line, the funds in the account will be forcibly emptied without a margin call. Tens of billions of BTC contract funds have been liquidated. Although there are many retail investors speculating about BTC, they cannot withstand the harvest of capital giants. Of course, as long as BTC can stand up, you should not worry that there are no retail investors to hype BTC, but you need to give retail investors some time to grow.
Before the retail investors grew up, BTC lost the motivation for speculation, and retail capital was not harvested and there was no motivation for speculation. If the contract liquidation funds increase, but the contract size does not decrease. Then it proves that there are still speculators who want to hype BTC, which is beneficial to BTC. However, the increase in liquidation funds and the decrease in contract size prove that the market is running out of money. So I think the market hype about the reduction of leverage in BTC is not good news for BTC.
