Garrett Jin explains his bearish view before the crash: Market Flashing Overbought Signal, Escalation of Trade Tensions
3 hours ago
On October 13th, Whale Garrett Jin, who previously sold off a significant amount of more than $4.23 billion worth of BTC in a high-profile manner and then switched to ETH, expounded on his bearish view prior to the 10/11 crash. Here are the details:
- From a technical analysis standpoint, at that time, U.S. tech stocks, A-share tech stocks, and major cryptocurrencies all exhibited overbought signals, such as MACD divergence.
- Cryptocurrencies and U.S. tech stocks have historically shown a high positive correlation, which led us to think that risks would shift between the two. Over the past week, we observed a change in the structure of the U.S. stock market, shifting from a risk-on to a risk-off trading mode. The cryptocurrency market also showed a similar pattern.
- Since September 26th, trade tensions have been escalating. However, due to the bullish market sentiment, investors largely ignored this tension. The situation intensified just before the stock market crash last Friday.
- Both A-shares and the U.S. stock market had entered a risk-off mode before the 10/11 crash. We cannot predict when President Trump will take retaliatory measures, but our internal quantitative system has already issued a risk warning.
- The market's decline is not only caused by macro factors but also by internal structural instability. Both the U.S. stock market and the cryptocurrency market have recently been driven by high-leverage long positions, creating fertile ground for a deleveraging crisis similar to the 2015 A-share crash and the March 2020 U.S. stock market crash. Unlike stocks, most cryptocurrencies lack an intrinsic value anchor. Their driving force comes more from investor sentiment - greed and fear. Therefore, trading platforms providing 5x to 100x aggressive leverage to retail investors for such volatile assets could trigger a liquidity crisis, whether prices rise or fall.
Garrett Jin stated earlier today that he has no relationship with the Trump family. There was no insider trading in the switch, and the fund does not belong to him but to his clients.
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