The cryptocurrency market staged a dramatic comeback. Just recently, Bitcoin had just dropped below 80,000, and everyone thought we were about to enter a long bear market when Ethereum suddenly started a violent surge, rising 40% in three days, and Bitcoin also returned to the 100,000 mark, sending the shorts to the crematorium. This operation is comparable to the (Avengers) version of the coin circle.
However, many people are puzzled as to why Ethereum suddenly surged so much without any major favorable news. It is worth noting that just on the early morning of July 22 last year, the SEC (U.S. Securities and Exchange Commission) unexpectedly announced the approval of the Ethereum ETF review, and Ethereum only rose 20% on that day.
Actually, this explosion seems to belong to a celestial game. I wonder if everyone has watched (Qing Yu Nian) where the Emperor Qing climbs high to appreciate chrysanthemums, and the case of assassination in the suspended temple, where the four major forces of Emperor Qing, Chen Pingping, Si Gu Jian, and Beiqi each used their own means without any prior communication, ultimately achieving their own goals.
This surge in Ethereum is quite similar. First, let's look at the situation in the six months before the surge. Bitcoin repeatedly broke historical highs, while Ethereum struggled, at one point being jokingly referred to by retail investors as the air force ATM. Under the name of the 'harvester' in the coin circle, 'Sun Gua' built positions around 3200, and the accumulated chips were deeply trapped at the high point. Soon after, Bitcoin broke below 80,000, and Ethereum fell to 1300, hitting a new low in nearly three years.
Just when everyone thought Ethereum was hopeless and the market was turning bearish, the celestial game came. First, Ethereum recently initiated the 'PECTRA upgrade,' which not only increased the staking limit but also introduced 'account abstraction' (EIP-7702), which simply means allowing users to navigate blockchain as smoothly as using WeChat Pay. This upgrade directly removed the label of Ethereum being slow and outdated.
On the same day, the United States suddenly signed a tariff truce agreement with the United Kingdom, while China and the U.S. also began tariff negotiations in Switzerland. Upon seeing the risk alarm lifted, safe-haven asset gold began to plummet, and a large amount of escaping capital started to flow into the coin circle.
Capital itself is a hunting game. Once both the information and technical aspects are supported, the hunting of shorts begins. The shorts, who were originally comfortable preparing to earn easily, found the price soaring. In 48 hours, nearly 500 million dollars in liquidation occurred, setting a record for daily short liquidations since 2020.
In the last two days, many news reports have stated that certain whales have started to buy again, and major players have begun to collectively accumulate, but at this point, risk signals have already begun to sound. During the bear market, whales are madly accumulating, and the stock is almost halved. Currently, the net buying is actually not much. However, some may wonder, if the buying has not increased, where does this surge come from? Here’s a principle of futures for newcomers: when shorts are forced to liquidate, they need to buy back the tokens they shorted earlier. The more shorts that are liquidated, the larger the quantity that needs to be purchased, creating a death spiral, which is a short squeeze.
Historically, several short-squeeze events have directly driven the benchmark assets to rise sharply. Currently, the situation with Ethereum is that large capital is behind pushing the short squeeze to clear the shorts, and the market will still fluctuate violently in the coming days. There are two particularly noteworthy pieces of news.
First, there is the well-known fact that the China-U.S. tariff negotiations are about to conclude. There are reports suggesting that the negotiations are progressing very smoothly, which has greatly eased the current FOMO sentiment in the cryptocurrency market.
Another noteworthy piece of news is that BlackRock is having in-depth meetings with the SEC to discuss policies related to cryptocurrency ETF staking and option exercises. It is important to note that although Ethereum previously passed the ETF review, Ethereum without staking functionality has no soul. If the SEC allows Ethereum staking this time, it will further stimulate the existing ETF market growth, and the specific results await announcement.
If formally approved, it would undoubtedly be another major positive. Of course, as the popular saying in the financial circle goes, good news landing is bad news. Whether those whales who accumulated at low positions some time ago will choose to sell at this time is unknown.
In fact, looking back at the ups and downs of the entire cryptocurrency market over the years, the actions of the big whales can basically be summarized in one sentence: buy when no one cares, sell when the crowd is noisy.
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