After 12.3, 9.4 and 3.12, the Crypto world is back with 5.19, so what will be different this time?
For veteran cryptocurrency players, these four historic plunge moments are fresh in people’s minds.
On December 3, 2013, the Bitcoin market began to gradually turn bearish after five ministries and commissions, including the Central Bank of China, jointly issued a “Notice on Preventing Bitcoin Risks,” which required financial institutions and payment institutions not to conduct Bitcoin-related businesses and pointed out the risks of crypto assets like Bitcoin.
On September 4, 2017, the Central Bank of China and seven other ministries and commissions jointly issued a “Notice on Preventing the Risk of Token Issuance and Financing”, which aimed to combat the ICO token issuance activities that started to flourish at that time, and within 10 days after the announcement, Bitcoin fell from $4,900 to a low of $3,387, while the majority of ICO tokens experienced “waist chopping ” or even “toe chop”, and just after most people were in despair, crypto assets such as Bitcoin experienced a rapid rebound and eventually ushered in a bull market phase of madness.
On March 12, 2020, influenced by the global economic uncertainty caused by the epidemic scare, Bitcoin started to fall from $7,300 and dived to $3,800 on March 13, a 24-hour drop of over 50%, followed by a year-long slow bull run for crypto assets such as Bitcoin.
On May 19, 2021, following a tweet by Tesla founder Elon Musk blaming Bitcoin for energy consumption problems and triggering the plunge of Bitcoin and other crypto assets, the People’s Bank of China and the three major associations of the financial industry jointly issued a voice to resist virtual currency speculation and re-emphasized the contents of the Notice on Preventing Bitcoin Risks and the Announcement on Preventing Risks of Token Issuance and Financing, which led to the already plunged further panic in the already chaotic crypto asset market.
In the past week, Bitcoin fell from a high of $58,000 to a low of $31,000, a 47% drop, while ETH fell from $4,100 to a low of $1,900, a 53.7% drop, and other cryptocurrencies were bloodied in a disastrous situation.
Of these four big plunges, three were related to China’s regulatory moves, but the market did not react the same way afterwards, showing that regulation was not directly responsible for the market going bearish, but only played a short-term inhibiting role.
Looking back at the past data, we see that the market saw a bear market after the first regulatory move and a raging bull market after the 2nd, so what will be the situation with the latest one?
Before we try to answer that question, let’s take a look at how this crash went down.
Short-term holders cut off flesh to trigger the decline, and long bar liquidation caused the market to plunge
According to on-chain data provided by glassnode, the SOPR indicator has fallen below 0.9 today, indicating that a large number of short-term holders have chosen to cut their flesh, and a large number of long bars in the market (including centralized exchanges and DeFi bars) were liquidated after the market drop triggered by panic selling by short-term holders, which further sunk the price of the coin.
And last night, it was rumored that Sun Yuchen’s 600,000 ETH in the defi mining pool came close to being liquidated, which, according to Godfish, could have caused ETH to fall to triple digits if they had been liquidated.
This time, the cryptocurrency world may have been more sinister than 312.
Also according to the Panic and Greed Index, the market is currently in an extreme panic phase, and the index value11 has reached its lowest value since March 2020, indicating that market sentiment may have reached its peak.
Will the panic of short-term cryptocurrency holders lead to a premature end of the bull market? Not Very Likely
Looking back at the crypto market in the past, we can see that the market has always turned from bull to bear with massive selling by long-term holders, while this plunge was caused by short-term holders selling while long-term holders chose to buy.
Interestingly, as the market panicked last night, Tesla founder Elon Musk tweeted again that the company has a pair of diamond hands (implying it will hold Bitcoin firmly).
Can a messy fist kill a teacher? This time I don’t believe it.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/after-519-crypto-market-bloodbath-bitcoin-turns-bear-or-ushers-in-a-mad-bull/
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