Wintermute: Crypto Sell Side Liquidity Drying Up, Caution Advised Against Overleveraging for Strong Bullish Reversal

BlockBeats News, August 4th, Wintermute announced that the Federal Reserve kept the federal funds rate unchanged last week, allowing the U.S. stock market to stabilize, partially due to a large forced sell-off completing the clearing process. The leveraged AI fund Situational Awareness publicly sold its positions at a discount to Castle Investment. After the AI infrastructure long positions were heavily hit and software shorts were squeezed, the chip stock sell-off initially intensified, but the market was able to absorb the hawkish stance after the position turnover. The crypto market showed relative resilience, with the Strategy once again selling off Bitcoin dividend-paying preferred stocks. A Coldcard firmware vulnerability led to a large amount of Bitcoin being stolen from users, and altcoins continued to be liquidated.

The U.S. stock market first saw a pressure release, followed by a downturn in crypto, in line with previous expectations. The major cryptocurrencies retraced by less than 4% under multiple pressures, indicating that the selling pressure is nearing exhaustion. It is still not advisable to heavily increase positions to chase after a strong rebound, but holdings and options data indicate that some people may be caught off guard by a short-term technical rally. This week, attention will be on the ISM services and non-farm payroll data, with the Jackson Hole meeting being the last clear signal window before the September interest rate decision by Chair Powell. Institutional OTC spot trading now accounts for a record 72% share, further consolidating liquidity into mainstream assets.