Last Sunday night (August 24), the Bitcoin market experienced a sudden flash crash, with a large bearish candle instantly breaking through the order book. Strangely, Bitcoin continued to decline on Monday morning, falling below $111,000. This seemed contrary to the "dovish" speech by Federal Reserve Chairman Powell, which should have led to a significant rise; instead, Bitcoin stubbornly dropped. What is going on? Is it malicious manipulation by whales? Or is it a bloodbath triggered by large-scale forced liquidations? What market logic and deep thinking are hidden behind this seemingly chaotic fluctuation?
- Bitcoin's "Stubborn Decline": Whale Manipulation and Liquidation Bloodbath?
Flash Crash and Continued Decline: On Sunday night European time, Bitcoin's price plummeted nearly $3,000 in just a few minutes, and then continued to drop overnight and on Monday morning, falling below $111,000.
Speculation on Causes: Such a rapid decline usually points to two situations: one is massive sell orders, and the other (essentially stemming from the same source) is large-scale forced liquidations. There are indications that both are present.
Reflection of an Immature Market: The article points out that this is an immature market, with its small scale and absurdly low liquidity in the Bitcoin market, which can still be manipulated by a few individuals.
The "Tragedy" of Altcoins: Even more frightening is that altcoins will continue to decline afterward, constantly setting new lows. A certain crypto punk OG seems to have realized this situation.
- Powell's "Dovish" Speech: Why Did It Fail to Support Coin Prices?
Content of the Speech: On August 22 at 10 AM Eastern Time, the Federal Reserve's official website released a statement and update on the monetary policy framework. Powell stated that inflation has risen slightly but is under control and is declining; GDP growth has significantly slowed; the unemployment rate remains stable and balanced (but this is "a peculiar balance," meaning both supply and demand are declining) → overall risks are rising. He concluded that these risks "may necessitate adjustments to our policy stance."
Market Interpretation: The market generally interpreted this as a foregone conclusion that monetary policy would be loosened in the future. Shortly after the announcement, Bitcoin's price soared to $115,000, an increase of 2.3%.
Brief Rise and Subsequent Decline: Within minutes and hours after Powell's speech and statement, Bitcoin's price surged to $117,000, then fell back to $116,000, indicating that market participants were organically analyzing and assessing the significance of this new situation. However, Bitcoin's price continued to rise throughout the weekend (until someone disrupted the celebration on Sunday), followed by a flash crash and continued decline.
- Deep Thinking: The Complexity Behind Market Fluctuations
The "No One Knows the Reason" Perspective: The article points out that in the circles analyzing Bitcoin prices, it is often said that no one knows why prices fluctuate. But sometimes we can find clues, though the results are not as clear-cut as expected.
Divergence Between Macro Trends and Price Movements: Global macro trends point to an upward movement, yet Bitcoin's price is declining in this range. Any reasonable assessment suggests that its price should double or triple.
"The Maximum Pain Theory": Bitcoin's price movements are completely capricious, disregarding market rationality or logical assessments. Even in the most optimistic bull market environment, it remains indifferent. The article has heard this referred to as the "maximum pain theory," and even Saylor's "million-dollar cost" average strategy has had little effect.
The Game of Post-Hoc Rationalization: The article believes that when engaging in such post-hoc interpretations, it is essentially playing a game of post-hoc rationalization, which is not particularly impressive.
Conclusion:
The reason Powell's dovish remarks failed to support coin prices, and the underlying factors behind Bitcoin's "stubborn decline," are a complex interplay of whale manipulation, large-scale liquidations, and market immaturity. This serves as a reminder to investors that the cryptocurrency market is full of uncertainties, and even in a macro favorable environment, irrational fluctuations may occur. Investors must remain vigilant, carefully assess risks, and avoid becoming victims of market manipulation and high-leverage liquidations.
Related Reading: The similarity of Bitcoin (BTC) prices to the Q2 decline is "stunning," and the Coinbase premium index has turned positive.
Original Article: “Why Did Powell's Dovish Remarks Fail to Support Bitcoin (BTC) Prices?”
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