The straw that broke Bitcoin |

Hacks Rampant, Cryptocurrencies Increase Risk |

Yingwei Finance – Recently, cryptocurrencies have plummeted wildly. Bitcoin once fell below $20,000 and fell to a minimum of $17,630.5. At present, Bitcoin has recovered to around 20,000 US dollars, but there is not much breathing room left for cryptocurrency investors, and the last straw to crush digital currency has come.

BTC chart, source:

BITI: Born to short Bitcoin

On Tuesday, financial institution ProShares launched a short bitcoin strategy ETF (symbol BITI), which is also the first ETF in the United States to short bitcoin. By inversely tracking the performance of the bitcoin futures index, the ETF hopes to provide a relatively cheap and easy way for investors to profit from further declines in bitcoin.


I believe that many digital currency fans will feel that it is a bit of a fuss. Bitcoin futures can also be shorted. Why is a short-selling ETF the last straw that crushes Bitcoin?

On December 10, 2017, Eastern Time, the world’s first bitcoin futures was officially listed on the Chicago Board Options Exchange, and it rose by more than 20% on the first day of listing.

At the beginning of the listing of bitcoin futures, it was in a period of vigorous development of digital currency. The listing of this futures expanded the acceptance and recognition of encrypted assets, making it one step closer to mainstream assets. The launch of Bitcoin futures is more beneficial than detrimental to the trend of the cryptocurrency.

BITI is completely different, the fund was set up to short Bitcoin. Although the current market value of the fund is less than 30 million US dollars, the birth of BITI is of great significance, representing that the market is extremely bearish on the cryptocurrency field, and it is not ruled out that there will be more similar funds in the future.

The appearance of BITI is thought-provoking, just like in the movie “The Big Short”, the protagonist keenly observed that the crisis was about to break out and created a short-selling tool. Also, after the outbreak of the epidemic, oil prices plummeted to around 0, and everyone thought it was impossible to fall any more. However, in April 2020, CME Group revised the code of its IT system to allow “negative oil prices” to be declared and traded. That month In 05, crude oil once plummeted to -40 US dollars / barrel, and all the long positions were liquidated.

Avalanche strikes

As the saying goes, under an avalanche, no snowflake is innocent. Under the recent avalanche of cryptocurrencies, there are indeed many “innocent” snowflakes.

In mid-May, the market value of the stablecoin was as high as 41 billion US dollars, and it was sought after by hundreds of thousands of people overseas, but it suddenly fell off a cliff without warning. It only took a few days for the price to go from close to 90 US dollars per piece. It fell to less than $0.00015 a piece. Tens of billions of assets were instantly wiped out, and those who continued to increase their positions during the slump ended up losing their money.

Binance, the world’s largest cryptocurrency exchange, suspended bitcoin withdrawals for several hours on Monday, as the cryptocurrency lending giant Celsius, which has 1.7 million users, also announced it would suspend accounts due to “extreme market conditions.” All withdrawals, swaps and transfers between.

The market is worried that Tether Limited, the world’s largest stablecoin issuer, as a shareholder of Celsius, will be dragged into the water, or it will trigger a “Lehman crisis” in the currency circle.

In addition, cryptocurrency stocks such as Coinbase (NASDAQ: ) and MicroStrategy (NASDAQ: ) have also underperformed, down nearly 80% and 66% respectively this year, and multiple companies have recently announced large-scale layoffs.

The data shows that among the listed cryptocurrency companies, the amount of shorting Coinbase ranks first, with about 1.38 billion US dollars, and more than 15% of the free circulation is shorted. And MicroStrategy’s short interest accounts for more than 27% of the issued shares, amounting to $537 million.

As the cryptocurrency fell, the snowballs formed by snowflakes were getting bigger and bigger, and the avalanche had arrived.


So far this year, the “leaders” of cryptocurrencies, Bitcoin and Ethereum, have both fallen sharply, and they have halved and halved from their highs in November last year, with a drop of more than 70%.

And the technical charts also show that a huge head pattern has formed, adding to the downward pressure.

With the accumulation of bearish sentiment in the market and the maturity of short-selling tools such as BITI, Bitcoin may fall again. Although many investors have been liquidated due to bottom-hunting recently, it is believed that this “ultimate” decline of Bitcoin will completely blow up the bulls, and then it is possible to build the foundation of the bull market again.

[This article is from Yingwei Caiqing, to read more, please log on to or download Yingwei Caiqing App]

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