For markets: Dominoes.
It sounds backwards, but traders betting against crypto helped it rocket. Traders short crypto using derivatives – contracts that track a coin’s price without requiring them to own it – so they make money if it falls and lose money if it rises. But if it rises far enough, the exchange closes the bet, forcing them to buy at whatever the market’s asking.
▶ Shorting bitcoin had been popular all summer, so as it climbed, more than $1 billion of those bets were closed in an hour – each forced purchase shoving prices higher and tripping the next one. In all, around $3 billion in bets were forcibly closed – the biggest wave of short liquidations since records began in 2021.
The bigger picture: Over $70,000 today… but eventually $0?
This week’s rally assumes crypto has a future – but not everyone’s convinced. Nobel-winning economist Eugene Fama puts the odds of bitcoin being worthless within a decade at almost 100%, arguing that anything this volatile can’t survive as money. Others point to the practical: bitcoin’s enormous energy appetite and quantum computing potentially threatening the encryption protecting people’s hoards.
▶ These aren’t new worries – but during a rally, investors tend to ignore them.