After Bitcoin hit $110,000, the market began to lose confidence. The next wave of plunge may drop to $69,000?
Why is the market starting to fail now?
1. High leverage leads to self-destruction
Now that Bitcoin has reached $110,000, the leverage ratio of borrowing money to speculate on Bitcoin has reached a record high. Futures market data shows that a total of $69.8 billion in contracts are betting on the rise and fall, and the financing rate is frighteningly high, indicating that bulls (people who are bullish) have pushed their chips to the limit. Once the price drops a little, these highly leveraged positions will be forced to close. For example, recently a short position worth $1 billion was forcibly liquidated, and the market collapsed like a domino. What's even more exaggerated is that on May 22, $405 million of positions were liquidated in one day, indicating that market sentiment has become extremely tense.
2. Positive policies turn into fog
Although the US (GENIUS Stablecoin Act) was passed, which seems to be a positive, the Democratic Party jumped out to accuse the bill of opening a backdoor for the government digital currency (CBDC) and monitoring people's funds. In addition, Trump's tariff war has made the global trade atmosphere tense, and the market has no idea how the regulatory policy will go. What's more troublesome is that after the Federal Reserve cut interest rates by 25 basis points, economic data showed that the economy was overheating, making the market unsure whether to continue to cut or raise interest rates next, and bulls and bears are engaged in a war of words every day.
3. Institutions began to run away secretly
Recently, Bitcoin ETF funds have been flowing out. Large institutions such as BlackRock have withdrawn funds for three consecutive weeks, indicating that institutional investors are cashing out at high prices. On-chain data also shows that although the total amount of Bitcoin has not changed much, miners and "whales" holding a large amount of Bitcoin have begun to sell. What is more dangerous is that because miners use more advanced 3nm mining machines, the computing power is concentrated in the hands of a few people. Once the price falls below $90,000, these miners may directly shut down and stop working. The sudden drop in market supply will trigger panic selling.
4. Technical issues are in the red
Looking at the 4-hour trend chart of Bitcoin, the RSI indicator has reached 68, close to the overbought warning line. The price formed a "diamond top" pattern (technical analysis term, which is a top reversal signal) near $112,000, indicating that the bullish force is beginning to weaken. If it falls below the support level of $108,000, those retail investors who bought at a high price may trigger stop-loss orders, and the price may fall directly to the psychological barrier of $100,000.
Why do you say it may plummet to 69,000?
1. A mirror that reveals the laws of history
If the starting point of this bull market (US$68,000 in November 2024) is used as the calculation basis, a drop to US$69,000 is equivalent to a 30% correction. Historically, after each Bitcoin bull market peaked, the mid-term adjustment range started at least 30% - for example, the 2020 bull market fell from US$60,000 to US$17,000, a full 70% drop! What's even more exaggerated is that some analysts use technical models to predict that this bear market may first fall to US$69,000, and then even fall to the bottom of US$25,000 to US$35,000.
2. The Fed may tighten the tap
If US inflation suddenly rebounds, the Fed may suspend interest rate cuts or even raise them again. Bitcoin and US Treasury yields are mortal enemies - if the 10-year US Treasury yield rises back to 5%, the price of Bitcoin may shrink by 20%-30%. What's more, global funds are now reveling in risky assets. Once the Fed withdraws liquidity, these hot money may withdraw from the cryptocurrency market overnight.
3. The market is full of time bombs
Stablecoin crisis: 86% of the US debt held by Tether, the company that issues USDT, is short-term debt due within one year, but 41% of USDT is locked in the market for a long time. This is like using short-term loans to speculate on long-term housing. Once the market panics, USDT may become waste paper in an instant, triggering a series of liquidations.
Miner rebellion: Mining machines are becoming more and more advanced, and computing power is concentrated in the hands of large mining farms. If Bitcoin falls below $90,000, these miners may shut down their machines directly, and the sudden decrease in the amount of Bitcoin in circulation in the market will trigger a sell-off and stampede.
Risks that must be watched out for and survival guides
Short-term minefields
The Trump administration may suddenly introduce stricter cryptocurrency regulations, such as requiring all transactions to be done under real names, which could cause the market to collapse.
If the $100,000 support level is breached, the algorithmic trading system will automatically sell frantically, and the price may fall freely.
Medium- to long-term survival strategy
Don’t use leverage: The market is now fluctuating like a roller coaster, and using leverage of more than 3 times is tantamount to suicide.
Escape in batches: Gradually reduce your position above $110,000, and don’t dream of earning the last Bitcoin.
Buy gold to calm down: Set aside some money to buy gold or U.S. Treasury bonds, so that you can still keep your money in case Bitcoin collapses.
My conclusion (blood and tears advice)
After Bitcoin hit $110,000, the market has become a crazy gambling game. Although institutional entry and regulatory standardization are the general trend in the long run, the three major mountains of high leverage, policy uncertainty and miners' selling pressure are pressing down on the price at present. The price is likely to fall to around 69,000 to take a breath. Don't be overwhelmed by the short-term surge. What you need to do now is not to go all in, but to fasten your seat belts - light positions, diversified investments, and being ready to run away at any time are the hard truths. Remember: in a bull market, you make money by holding on, and in a bear market, you survive by running.
Opportunities are fleeting, and callbacks are imminent. Buy the bottom and layout the spot, and the huge profits of altcoins are waiting for you! Doubling is not a dream, click the avatar to follow me, and join the bull market feast!
