As Bitcoin's price continues to decline, sparking widespread speculation about potential culprits, industry analysts are offering a counter-narrative focused on market structure and psychology. Qiao Wang, co-founder of Alliance, argues that the primary drivers of Bitcoin's price are not external shocks or coordinated manipulation by large firms, but rather technical analysis dynamics and investor sentiment.
Wang contends that investors have been incorrectly attributing the bear market to factors like selling by major market makers such as Jane Street, quantum computing risks, or a sell-off in software stocks. He emphasizes that these explanations are often based on correlation, not proven causality. Since Bitcoin is not a cash-generating asset, its valuation isn't tied to classical financial models, making its price movements more susceptible to the herd mentality inherent in technical analysis.
Echoing this view, an analysis of the recent sell-off suggests it was a forced, disorderly event characteristic of capitulation, not a smooth, coordinated dump by a single entity. The decline began with a period of distribution marked by lower highs well before February's sharp drop. The steep sell-off in February, accompanied by heavy volume and volatility, aligns with patterns of liquidation cascades and margin calls rather than manipulation.
Matt Hougan, Chief Investment Officer at Bitwise Invest, supports this assessment, stating the drawdown is a result of investors selling for various reasons, including cycle timing and macro uncertainty. The current ~45% peak-to-trough decline fits within the historical context of mid-cycle resets. With recent price stabilization indicating selling pressure may be subsiding, the focus is shifting from assigning blame to identifying where the market finds its next footing.
