The Federal Reserve's second round of easing is set! The cryptocurrency market is not a bull market; it is an institutional-led short squeeze slaughter.
Looking back at history helps us understand the present. During the pandemic in March 2020, the Federal Reserve initiated unlimited QE, directly injecting massive liquidity into the market.
Everyone witnessed the market conditions at that time: BTC skyrocketed from a low of $3,800 to a peak of $69,000, and ETH rose from $80 to $4,891, ushering in an epic two-year bull market across the entire crypto space. This was not a coincidence; it was an inevitable result of liquidity flooding the market, leading funds to flow into high-elasticity assets.
However, this time is fundamentally different from March 312—the market chips were primarily scattered among retail investors during the March period, with the rise being driven by “funds pushing retail investors along”; whereas now, BTC and ETH have long been heavily locked by institutions, significantly reducing the circulating supply.
Here is a set of concrete case data:
Grayscale's BTC trust currently holds over 650,000 coins, and the unlocking amount over the past six months is less than 1%, equivalent to locking up 650,000 BTC for the long term;
ARKK, under ARK Invest, has increased its holdings in ETH-related assets by 47% over the past year, and there has never been a large-scale reduction of holdings; more critically, after the ETH merge, the validator locked amount has stabilized at over 22 million coins, accounting for 18% of the current ETH circulating supply, and this portion of chips is locked for at least two years.
What does it mean when chips are highly controlled by institutions? Once the liquidity from the Federal Reserve's easing continues to pour in, the market will trigger a short squeeze due to insufficient circulating chips. At that time, it will not be a “slow rise”, but rather, short sellers will find it impossible to cover, leading to passive high-price chasing, resulting in a stampede-like increase—this is the squeezing logic under institutional control, which is 10 times stronger than a retail-driven market.
Lastly, a reminder for short sellers: closing positions early means a small loss and leaving; closing positions late, when the short squeeze starts, results in complete liquidation. The so-called “short seller alliance” has long disbanded due to differences; what remains now is just a group of retail warriors holding on by emotions.
The tide of liquidity is already on its way, and the barrier of locked chips by institutions has been firmly established. This time, it is not an ordinary bull market; it is a precise slaughter of short sellers—those who understand have already made their moves, while those who do not will only become cannon fodder in the short squeeze. $BTC $ETH
