Bitcoin's Decline: Not Market Manipulation
Bitwise CIO Matt Hougan recently stated that the recent drop in Bitcoin prices isn't due to market manipulation, but rather long position liquidation. He noted that various conspiracy theories have been circulating around the market.
- Initially, the blame went to Binance
- Then came Wintermute
- Next, it was an offshore macro hedge fund
- Some pointed to so-called 'paper Bitcoin'
- And more recently, the focus shifted to Jane Street
However, Hougan stressed that these are just speculations. The real culprit is a group of investors who previously bet on Bitcoin's rise and have now started selling their holdings.
How Long Liquidation Impacts the Market
These investors have offloaded their Bitcoin exposure in several ways:
- Selling directly in the spot market
- Reducing leveraged positions
- And even selling call options to reduce exposure
They made these decisions based on factors including:
- Expectations around the four-year cycle
- Concerns over quantum computing threatening crypto security
- Shifting funds to invest in AI startups
- And other market dynamics
Has the Market Bottomed Out?
Hougan believes the majority of this selling is now complete, and the market is entering a bottoming phase. He explained that this kind of volatility is a normal part of the crypto cycle, and the 'winter' will eventually give way to a new 'spring.'
He concluded: 'People always want someone to blame — I get that feeling. But reality is often far less dramatic than conspiracy theories.'