So have crypto hedge funds triggered the collapse by trying to get their money out of an illiquid market?
Other hedge funds, family offices, and wealthy individuals got caught up in the craze. They shoved serious money into a market with little liquidity, which propelled the market higher. But now if they try to get even a modicum of money back out, prices collapse — there being little liquidity.
With billions of dollars begging to be taken out of the market, every such move demonstrates just how illiquid the market is, and how impossible it is to take a hedge-fund-appropriate sum of money out without causing a plunge. For this scheme to work, they need to engineer another flood of money into the market so that the funds can get their money out. But the speculator’s saviors-of-last-resort – central banks – have shown no inclination to step in and bail those folks out.
Interesting article. It is hard for me to take it seriously when in the second paragraph I read this line..."Ripple, the crypto that has recently been touted as the “next bitcoin” or “better than bitcoin,”
Seriously? Anybody who has been in the crypto space more than 2 weeks ought to be able to laugh at that statement. Ripple could be "worth" 10 times the bitcoin price and it will still never be the "next bitcoin" or "better than bitcoin".
Anyway, reading the article - what is not stated is how these people/hedge funds are buying bitcoin. Are they buying the real thing from GDAX or other exchanges? The futures (cash settled) market? OTC from a broker?
I've no idea because they don't say. Bitcoin wasn't invented so that Wall St traders could make millions. I understand that is a side benefit, and even I participate (on a small scale) in the volatility and gains. The difference being I'm trying to acquire more bitcoin and the Wall St traders just want more USD.
This is why I favor an ETF that is actually required to hold the bitcoin in a provable and publicly known address. A futures market that is cash settled is really just legalized gambling (which ought to be legal anyway). This would bring liquidity to the market and give an outlet for institutional investors who actually want to have the option to "take delivery" of their bitcoin if desired.