Source: Talking about Li and other things
I saw an interesting article, according to CoinDesk: In a recent 13G form filing, BlackRock (BLK) disclosed that it currently holds 5% of Strategy (MSTR), equivalent to approximately 11.2 million shares. As of September 30, 2024, this is an increase of 0.91% from the previous 4.09% holding. As shown in the figure below.
BlackRock’s IBIT is currently the largest BTC ETF, with assets under management exceeding $56 billion as of the time of writing. See the figure below.
MicroStrategy is the largest institution holding Bitcoin, currently holding 471,107 Bitcoin on its balance sheet, with an asset value of over 45 billion dollars (average purchase cost of about 64,524 dollars) as of the time of writing. As shown in the figure below.
It can be said that both of these are giants, and their movements will have a clear impact on Bitcoin's trend.
1. Strong alliance or brewing a black swan?
Then, we might need to continue pondering a question: are they looking to form a strong alliance to further achieve American control over Bitcoin? Or is one of them using capital to manipulate the situation while secretly preparing for a black swan event in Bitcoin?
Here, let's hypothesize a scenario (note, this is only an assumption):
The first scenario is to continue acquiring until BlackRock completely controls MicroStrategy. This way, they would not only become the largest BTC ETF fund in the world but also the institution holding the most Bitcoin in spot.
The second scenario is to openly control the situation while secretly manipulating behind the scenes. For example, first controlling the price of Bitcoin to drop, then BlackRock takes the opportunity to start selling MicroStrategy's stocks, continuing to create panic, forcing MicroStrategy to sell its Bitcoin, and slowly buying back the sold Bitcoin at a low price, ultimately letting MicroStrategy go bankrupt and leaving itself as the sole power.
If the second scenario occurs, it would undoubtedly be a new black swan event for the market, and could lead to a chain reaction of market crashes. Even in the end, BlackRock may not be able to save the situation, and the market could collapse in a short time (similar to the previous FTX collapse). But as the saying goes, fortune favors the brave; capital never shows any mercy.
Of course, the above is just our imagination of possible plots. Personally, I will still strictly follow my position plan and will not be influenced by any news. As for how the market will move in the future, it still needs time to verify. But we just need to think clearly about one thing: assuming (note that this is just an assumption) that a black swan event occurs, who will ultimately become the real winner?
Interestingly, just yesterday (February 9), MicroStrategy's founder Michael Saylor hinted in an interview that he would destroy the Bitcoin private keys after his death to ensure that his Bitcoin would never be sold, as shown in the figure below.
Still, as mentioned above, these are all speculations, guesses, and assumptions. I can't predict how institutional big shots are positioning themselves, but as mentioned in a previous article, we always keep 10% of our position as 'bullets' to respond to major black swans. If the above second scenario really happens, we will not hesitate to use our last reserved position to buy Bitcoin during the market collapse and then continue to hold it.
If we set aside a short-term perspective and discard the idea of making quick money, such as looking 5 years or 10 years ahead... then buying Bitcoin now at any time is not expensive!
2. What does the increase in short positions on Ethereum mean?
According to on-chain data, the current Unhedged Short position has reached a relatively high level, even the highest in nearly a year, indicating that market sentiment is currently very bearish, as shown below.
However, as we mentioned in our article a few days ago, there is an interesting phenomenon: on one hand, ETH's price is plummeting, while on the other hand, funds into ETFs are continuously flowing in, even breaking records for inflow, as shown below.
In just the past week of trading days (from February 3 to February 7, Eastern Time), ETH ETF saw a net inflow of 420 million dollars in a single week, with the largest inflow coming from BlackRock's ETH ETF (ETHA), which had a weekly net inflow of 287 million dollars.
Moreover, if we continue to pay attention to ETH's trading volume, we can actually find that as the price has dropped, the trading volume has remained strong, with two particularly obvious points in time:
The first point is that around January 21, before and after Trump's inauguration, ETH's trading volume surged significantly.
The second point is that after the sharp drop in ETH on February 3, the trading volume also saw a significant surge.
But so far, after a week has passed, ETH's price seems to show no signs of recovery. When BTC rebounds, ETH continues to lie still; when BTC drops, ETH follows suit, and many people's patience is wearing thin.
As of the time of writing, ETH's price is still hovering around the 2600 mark, which represents about a 46% drop from the peak of the last bull market. As shown in the figure below.
So, here is a question worth considering: why are people (hedge funds) so keen to short Ethereum?
If it were in the past to short, we might still understand it, as ETH back then could be labeled as a security by the SEC at any time. However, with the crypto-friendly President Trump taking office, the WLFI (World Liberty Financial) under the president's family is also buying ETH.
Although a few days ago, KOLs were loudly proclaiming: the president sold ETH and crashed the market, the bear is coming... However, people only saw WLFI publicly transferring coins from their wallet to Coinbase. Did you personally see the president selling coins for US dollars?
However, as a partner in the group described: seeing the man you like going to such places, although rationally, he may not really do such things, it always feels uncomfortable.
Or let's consider the issue from a more benevolent perspective. If I were WLFI and wanted to continue buying a large amount of ETH, I would also not publicly disclose my trading records. The more I buy, the more retail investors will follow blindly. Why should I raise a flag to help retail investors?
If you believe the saying 'a man's words are lies,' then whether WLFI is a bad man is something you need to judge for yourself, as shown in the figure below.
Returning to the main topic, as mentioned above, regardless of the inflow of funds into ETFs or the 'policy side' (including ETH being the first altcoin to pass the US spot ETF), things are much better than before. However, why is it still despised by many retail investors?
Let's look at this reason from a few different perspectives:
From the perspective of retail investors, most will only look at price fluctuations. If it rises, it’s a bull market and should continue buying; if it falls, it’s a bear market and should be abandoned.
From the market perspective, this could be a comprehensive and complex issue, such as possible operations from hedge funds, market manipulation by large institutions, insufficient innovation in Ethereum itself... and so on.
Of course, it could be that institutions are playing a bigger game, or perhaps they have long been preparing for a downturn (collapse), and when they have not accumulated enough chips (voice), they will not raise the flag for retail investors who like to tread water according to historical patterns.
From the current ETH/BTC exchange rate, ETH's performance is severely lagging behind BTC, even returning to the 2020 level, as shown below.
Additionally, from the current weekly K-line perspective, ETH's trend does not seem too good. For example, the RSI moving average seems to have begun a downward trend, as shown below. However, one point can be simply compared with the lines around the week of May 6, 2024.
So, given the current complex overall situation, will ETH experience a 'short squeeze' next?
We do not provide an answer here, as everyone may have a different answer. We will leave it for everyone to ponder.
Supplementary knowledge: What is a short squeeze?
When there are a large number of investors shorting the market, if the market suddenly rises, these short sellers will face losses and be forced to buy back to cover their short positions. This large-scale forced covering will further push up the token price, thus creating a short squeeze.
While respecting the market, one must maintain a certain level of patience. If you do not want to lose money in volatility, then seriously think about your risk tolerance and strictly manage your position according to your risk preference.
Let's talk about this for today. Best wishes~
