Bitcoin fluctuates at high levels. The ALPACA incident reveals trading risks. US encryption regulation continues to advance.

This week, the Bitcoin market is in a high oscillation range of $93,500 to $95,500. Some altcoins such as the SUI ecosystem, Virtual ecosystem, and AI-related Tokens have seen significant rises. The overall market is still waiting for key data such as unemployment rates and non-farm payrolls to determine the trend.

The cryptocurrency market presents a complex landscape. The ALPACA incident revealed that some operators profit by controlling contracts of low market cap coins, utilizing short squeezes and funding rates, highlighting the speculative risks in the market. At the same time, U.S. policies are trending towards supporting crypto assets, and the passage of Arizona's "Strategic Bitcoin Reserve Act" marks a speeding up of the mainstreaming process of cryptocurrencies.

The ALPACA incident reflects the typical operational mindset of market makers:

1. Set clear goals: Know that the contract will be delisted and maximize profits through price manipulation.

2. Phase One: Control market and stabilize prices to maintain high prices for platform delivery.

3. Second phase: induce short selling, then pump up to harvest the shorts.

4. Phase Three: Gradual sell-off to cash out after delivery.

In this process, short sellers became the "fuel" driving the price rise:

• After the delisting announcement, the market is generally bearish, and short positions have surged.
• The dealer accumulates chips and pushes up the price.
• Negative funding rates provide additional capital for long positions.
• The price rise forces short sellers to close their positions, creating a vicious cycle.
• Binance has shortened the funding rate settlement period, accelerating this process.

This type of operation usually targets low market cap coins. Investors can pay attention to coins with a market cap of less than 100 million dollars, observe their OI and funding rate changes, and combine them with other indicators for a comprehensive judgment.

In terms of policy regulation:

1. The SEC has approved the listing of ProShares XRP futures ETF, but not the spot ETF that the market anticipated. The SEC has delayed the approval decisions for multiple spot crypto ETFs, which are expected to be completed by June 2025.

2. Arizona has passed the "Strategic Bitcoin Reserve Act", allowing public funds to invest in Bitcoin, but it still requires the governor's signature. This reflects the trend of cryptocurrency mainstreaming and may prompt other states to follow suit. However, Governor Katie Hobbs' tendency to veto raises doubts about the bill's prospects.

Whether the bill is ultimately passed or not, the legislative process for Bitcoin reserves in various states of the United States is accelerating. At the national level, proposals for establishing strategic Bitcoin reserves are also being discussed. Although these initiatives may be difficult to implement in the short term, they will promote the further integration of crypto assets into the mainstream financial system in the long run.