What is happening in crypto?
Since October 10th, crypto markets are now down -50%, erasing $2.2 TRILLION worth of market cap.
Bitcoin has officially erased ALL of its post-election rally, now down -10% since Trump's election.
Why is it crashing? Let us explain.
(a thread)

Twitter

Author | Jeff Park (Chief Information Officer, Bitwise)
Compiled by Odaily Odaily(@OdailyChina)
Translator | Dingdang (@XiaMiPP)
Editor's Note: On February 5th, the cryptocurrency market experienced another crash, with over $2.6 billion liquidated in 24 hours. Bitcoin briefly plummeted to $60,000, but the market seems to lack a clear consensus on the causes of this decline. Bitwise CIO Jeff Park offers a new analytical framework from the perspective of options and hedging mechanisms.
...

The Black Swan Event Was Actually This: The Real Reason for the Recent Bitcoin Crash

Renowned crypto investor Jack Yi used Aave revolving lending to build a $2 billion ETH position, only to see it crumble during the market crash [...]
The article, "Yi Lihua Completely Sells Off ETH! Trend Research Sells 650,000 Ethereum in a Week, Losing $730 Million," was originally published on BlockTempo, the most influential blockchain ABMedia media.

Yi Lihua completely liquidated his ETH holdings! Trend Research reportedly sold 650,000 Ethereum in a week, incurring a loss of $730 million before exiting the market.

Author | Jeff Park (Chief Information Officer, Bitwise)
Compiled by Odaily Odaily(@OdailyChina)
Translator | Dingdang (@XiaMiPP)
Editor's Note: On February 5th, the cryptocurrency market experienced another sharp drop, with over $2.6 billion liquidated in 24 hours. Bitcoin briefly plummeted to $60,000, but the market seems to lack a clear consensus on the causes of this decline. Jeff Park, CIO of Bitwise, offers a new analytical framework from the perspective of options and hedging mechanisms. [...]

Extreme volatility is here to stay as uncertainty has elevated yet again.
The macroeconomy is shifting and stocks, commodities, bonds, and crypto will move.
Want to receive our premium analysis?
Subscribe to access our premium analysis below:

Ultimately, Bitcoin and broader crypto are not new to massive 50%+ drawdowns.
If you zoom out far enough, every bear market and crash becomes a rounding error.
We think Bitcoin remains promising long-term.
Follow us @KobeissiLetter for real time analysis as this develops.

The ETF outflow data tells the story. $533M net outflow yesterday alone. BTC ETFs lost $1.28B in 7 days while ETH ETFs saw $342M leave. Vitalik dumping $13M ETH at the same time 7 Siblings are buying the dip at $1,995. This isn't retail panic. It's repositioning.