News

BlockBeats News, February 7, Bitcoin has suffered its worst single-week decline in over three years. But for some die-hard crypto enthusiasts, and even the largest and most well-known bulls, the worst part is that they are unclear about the exact reason for the plunge. Michael Novogratz, head of crypto commercial bank and trading firm Galaxy Digital, stated that there are various market theories about this round of sell-off, ranging from investors shifting to prediction markets and other high-risk bets, to widespread profit-taking after a booming bull market, but there is no definitive trigger. Here are some of the mainstream analyses in the current market: · Emergence of new hotspots: Prediction markets, gold, silver, artificial intelligence, and so-called meme stocks have all recently been vying for traders’ attention, diverting focus from cryptocurrencies. In the past, Bitcoin was the consensus choice for asymmetry, but now with artificial intelligence, prediction markets... there are many other areas for speculation. · Potential increase in supply: Wall Street is trying to capitalize on the popularity of cryptocurrencies by launching Bitcoin ETFs, tokenized products, and derivatives. Their surge may not affect the absolute quantity of tokens like Bitcoin and Ethereum, but some investors believe their emergence weakens Bitcoin’s appeal as a scarce asset. Some analysts say that by launching ETFs and complex derivatives, Wall Street allows investors to bet on Bitcoin’s price without having to buy or hold the actual tokens. · New regulatory expectations: Some investors speculate that the decline in crypto prices may be caused by the nomination of Kevin Warsh, Trump’s pick for the next Federal Reserve Chair. Warsh is considered more hawkish in using interest rates to curb inflation and more supportive of a strong dollar. Higher interest rates and a stronger dollar typically hurt alternative assets like gold and cryptocurrencies, reducing their appeal to investors. · The CLARITY Act faces obstacles: The CLARITY Act, currently under discussion, aims to establish a clear regulatory framework for the booming industry. However, disputes between trading platforms and traditional banks have stalled this momentum. Without this measure, many financial firms are hesitant to integrate digital assets into their businesses. Unless a compromise is reached, this dispute could deprive the crypto market of catalysts that could have sustained its rally. · Simple profit-taking: Novogratz and some other investors believe that the sell-off is largely driven by investors eager to lock in profits. These profits were accumulated during the FOMO atmosphere in 2024 when Trump was elected and promised to make the US the world’s crypto capital, accompanied by the rise of Bitcoin, Ethereum, and other digital tokens. Some analysts believe that this crypto winter may thaw faster than previous ones. There have been no major company collapses or indictments, which in past crashes triggered crises of confidence. For believers, Friday’s rebound convinces them that cryptocurrencies always bounce back, which is part of the reason they persist in investing. “The infrastructure is stronger, stablecoin adoption continues to grow, and institutional interest hasn’t disappeared, it’s just temporarily on the sidelines,” said Jasper De Maere, strategist at crypto trading firm Wintermute. Interest in these investments “can come back very quickly.”

On February 7, on-chain analyst Ember (@EmberCN) monitored that Aave founder Stani.eth sold 1,700 ETH (about $3.53 million) in the past 13 hours and purchased 30,727 AAVE tokens. In the past 24 hours, Stani.eth sold a total of 6,204 ETH (about $11.88 million), with an average selling price of $1,916.

According to Odaily, Arthur Hayes posted on X stating: "The sharp drop in BTC may have been caused by traders' hedging operations on IBIT structured products. I will compile a complete list of all notes issued by banks to more clearly identify the potential triggers for sudden price surges and drops. Since the rules of the game have changed, we must also keep up with the times."