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A report on Bitcoin worth $450 million?

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The crypto bull market is experiencing a correction, which tokens are performing the best?

The long-awaited correction in the cryptocurrency market has finally arrived.

Since the end of last year, the expected approval of Bitcoin spot ETF has been driving the continuous rise of the cryptocurrency market. Narrative targets such as Bitcoin ecosystem inscription and Solana ecosystem meme are also skyrocketing, and the market seems to be climbing relentlessly, leaving those who are waiting for a "pullback to buy the dip" far behind.

Entering January, people's expectations for "Bitcoin spot ETF approved on January 10th" became clearer and stronger. However, at the same time, investors who have made profits over the past few months are also prepared to "sell the news". On the first day of work in the 2024 New Year, the market's enthusiasm reached a new high for Bitcoin after it broke through $45,000. But just one day later, the industry suddenly experienced a long-unseen "bull market correction", and the price of Bitcoin once fell below $42,000 within an hour. The liquidation across the network increased to $451 million in one hour, making many "just fully loaded" investors "tearful".

However, looking back at 312 before the start of the last bull market and 519 during the bull market, the cryptocurrency industry experienced significant declines during periods of market activity. The current price fluctuations in the market actually further prove that the cryptocurrency market is on the path to a new bull market.

Why is it falling?

The essence of the cryptocurrency market is highly volatile, like a roller coaster, full of surprises and fears, and you never know what will happen in the next second. The current crash is widely believed to be caused by the expectation of a correction in the cryptocurrency market, the correction in the US stock market, and the possibility of a price waterfall caused by Matrixport's report, which is another factor worth paying attention to.

Market Profit Pullback

The volatility of the encryption market is not only due to the emerging and immature characteristics of the market itself, but also influenced by various factors such as regulation, technological development, and the psychology of market participants. From the perspective of individual investors, there seems to be a common expectation that the encryption market will experience a certain degree of correction.

Especially for the more volatile cryptocurrency market, history tells us that prices cannot continue to rise in one direction indefinitely. There will always be a period of correction, which is a healthy adjustment for the market and provides an opportunity for those who missed the initial rise to get on board.

During the rising market, retail investors hope to catch the upward trend while also anticipating a pullback, much like waiting for Black Friday sales. When the market is good, everyone wants to jump on the bandwagon, but they also hope it moves slower so they have time to get on. Of course, no one wants it to move too slowly.

This is the daily life of retail investors, always oscillating between hope and disappointment, waiting for that perfect buying opportunity. And the profitable funds give these retail investors such an opportunity. Especially after a period of upward trend, many investors choose to take profits and close their positions.

In March, ORDI cast a sheet with a cost of 2 to 3 US dollars, which includes 1000 coins. According to the price of 50 US dollars per ORDI, the price of one sheet is 50,000 US dollars. If it has not been sold for 10 months, this is a 200,000-fold increase in investment.

Not only ORDI, but also the Solana-based meme token SILLY has achieved a 20,000-fold increase. A few days ago, SILLY surged to a new all-time high of over $0.16. The top ten SILLY holders (excluding CEX addresses) own 18.5% of the total supply, with the highest floating profit being 27,000 times and the lowest being 0.7 times. The average floating profit is 30 times, and most of them bought in extremely early and have been holding until now.

Money flows from one pocket to another, and behind these 20,000-fold increases and profit-taking is the process of selling cryptocurrencies to lock in profits. This leads to an increase in supply in the market. As more and more investors choose to sell, the market becomes oversupplied and prices naturally fall.

Additionally, from the perspective of option implied volatility, this market crash was not without any warning signs.

The options market is often seen as a "leading" indicator of the spot market. This is because the options market can reflect traders' expectations of future price trends. The growth of CALL options indicates a bullish market sentiment, while the growth of PUT options reflects bearish sentiment.

As of now, the CALL (bullish) options in the Bitcoin market have already seen significant growth, so from the perspective of implied volatility of options, the profit and loss ratio of retail investors betting on PUT (bearish) options will be better before the ETF news is implemented. Therefore, the possibility of investors buying Bitcoin PUT options is increasing. This bearish sentiment may spread to a wider market and affect the decisions of other investors. When more and more people expect the price to fall, they may choose to sell their Bitcoin holdings, thereby putting downward pressure on the actual price.

The collective expectation of the market can sometimes trigger self-fulfilling prophecies. In other words, if enough investors expect prices to fall and take corresponding selling actions, their collective behavior may eventually push prices down. This phenomenon is particularly evident in highly speculative and emotional markets.

美股新年开局不佳

translates to

US Stock Market Starts New Year Poorly

The trend of the encryption market seems to often follow that of the US stock market. It is clear that the start of the US stock market in 2024 is not good, and the upward momentum at the end of last year has stalled today, and investors have also reduced their bets on the magnitude of interest rate cuts.

Today, the once dominant "Magnificent Seven" of the US stock market saw a decline, with the Nasdaq index falling 1.6%. Analysts at Barclays Bank issued a warning that the growth rate of the service industry, which has been supporting the market, is unlikely to exceed 10% this year. Apple's stock price fell 3.58% today, hitting a new low since November 13th.

Chip stocks also saw a downturn, with the Philadelphia Semiconductor Index falling 3.65%. ASML's stock price fell 5.28%, Nvidia's decline was 2.73%, and TSMC ADR fell 2.38%.

Not only technology and chip stocks, but also blockchain-related US stocks are showing a general decline.

At the junction of 2023 and 2024, the blockchain-related US stocks experienced a few days of ups and downs. On December 30th, blockchain-related US stocks fell across the board, with Bitdeer falling 22%, Marathon falling 12.3%, and Coinbase falling 8.05%. Although on January 2nd, before the opening of the US stock market, blockchain concept stocks briefly rose, with Canaan Technology soaring 19%, Marathon Digital rising 16%, Riot rising nearly 12%, and Coinbase rising nearly 7%. However, Coinbase was unable to recover its losses after the opening.