Bitcoin collapses, cottage coins savagely harvest leeks, who will fix the bandwagoners “Muskies”?

Bitcoin, the “high roller” of the cryptocurrency world, has collapsed, but other cryptocurrencies are gaining more traction. The volatility was triggered by the unpredictable noise of the big bankers, and the consequence was the savage harvesting of the small retailer.

Recently, Bitcoin, the “high roller” of the cryptocurrency world, has collapsed, while other cryptocurrencies are gaining more traction. The volatility was triggered by the unpredictable noise of the big bankers, and the consequences were a savage harvest for the small investors.

The absurd “shout order” game

On May 16, the dogcoin moved briefly higher, back above $0.54 per coin. Tesla founder Elon Musk posted on his social media platform that ideally, dogcoin could speed up block time by 10 times, increase block size by 10 times and reduce fees by 100 times, making it an easy win.

Other virtual currencies experienced a dip in the previous days and started to pull back. Ether continued to move higher, extending its intra-day gains to 5%; Bitcoin rose more than 3% intra-day and is back above $48,000 per coin.

Prior to this, Musk was a staunch “bandwagoner” for bitcoin and dogcoin, known as the “godfather of cryptocurrency,” and had a large following of “believers” behind him –following his words, buying or selling like crazy.

On March 23rd (US time), Musk said that it was now possible to buy Tesla with Bitcoin, and that Bitcoin paid to Tesla would remain Bitcoin, rather than being converted to fiat currency. Bitcoin rose in response, with the price of one bitcoin at $56,388.7 as of 19:00 GMT on March 24, a jump of more than 1,380 percent from the low of $3,800 under the epidemic in March last year. At one point in March, bitcoin topped out at a record high of $61,468.

But just last week, Musk suddenly flip-flopped and announced on social media again, “Tesla has called a halt to purchasing cars with Bitcoin. We are concerned that bitcoin mining and trading is causing a skyrocketing consumption of fossil fuels, especially coal, which has the worst impact of all fossil fuel emissions.” He also said that dogcoin is a scam.

This instantly brought about a rapid selloff in most digital currencies, including bitcoin and dogcoin. Bitcoin plunged $10,000 at one point. As of 11:43 p.m. BST on May 16, Bitcoin was still below $50,000 at $47,896.

However, the dogcoin rebounded sharply after he showed goodwill again the following day, saying he was working with its developers to improve trading efficiency. As of 13:00 GMT on May 16, it spiked to $0.53 from a low near $0.38 after the crash in early May.

For the average investor, bitcoin is already a “high roller”, and it’s hard to see a thousand-fold spike again. If bitcoin rises another 10 times, this means that the market value will reach more than 10 trillion dollars, the total GDP of the United States is just over 20 trillion dollars, the entire U.S. stock market valuation is just over 40 trillion dollars. As a result, dogcoin has just become the next trust. Recently, many investors have sold their bitcoins and switched to the “cryptocurrency world’s oldest”, ethereum, and the cottage coin dogcoin is also a popular target.

The initial trading price of dogcoin is $0.000559, and it has been trading below $0.001 for a long time in the past few years. Before 2021, the highest price of dogcoin was less than $0.02, but under the crazy hype of the crowd, the price of dogcoin once surpassed $0.7, and the highest cumulative increase of more than 12,000% so far this year.

“Young people who sold bitcoin at a high level with their left hand and bought dogcoin with their right hand – and got rich as a result – abound, but the drastic fluctuations have also left many believers bloodless.” A cryptocurrency exchange practitioner told the First Financial News.

In the industry’s view, if Bitcoin has its consensus value and deflationary properties, then Dogcoin is a full-fledged “cottage coin”. Even the founder of Dogcoin said it was originally created as a satirical spoof of virtual currencies, and that “it’s a joke that’s bound to disappear.

What’s even more absurd is that a Shiba Inu coin (SHIB) has recently been created to “kill” dogcoin.

The “bandwagoners” are calling the shots in the market, often with an agenda, but the result is a savage harvest of “leeks”. Many industry insiders call for the urgent need for the relevant authorities to rectify and regulate the field.

Bitcoin collapses, cottage coins savagely harvest leeks, who will fix the bandwagoners "Muskies"?
Bitcoin collapses, cottage coins savagely harvest leeks, who will fix the bandwagoners "Muskies"?

The Big Banker’s Small Calculations

Musk’s wave of operations is really unintelligible, as he “blew up” Bitcoin for a while and then disliked it for consuming too much energy, which may be behind another set of calculations.

Musk was on the verge of a meltdown after being shorted by Wall Street capital giants, but over the past two years he has taken the reins of alternative finance in the cryptocurrency world. It’s safe to say he’s gotten a taste of financing on Bitcoin.

In the first quarter of this year, Tesla generated the highest quarterly profit in its history – $4.4 billion. Of that, the sale of bitcoin brought in $100 million in profit, the sale of cars instead lost more than $100 million, and the rest of the profit came from the sale of carbon credits.

Tesla’s earnings report shows that as of March 31, 2020, the fair market value of the company’s bitcoin holdings was $2.48 billion, meaning that the company is expected to make a profit of about $1 billion if it cashes in the digital currency. with the price of bitcoin at $59,000 on March 31, $1 billion of the $2.48 billion market value is a profit, indicating that the average cost of Tesla’s bitcoin position is just under $25,000 per unit. In other words, Musk was “ambushed” long before he went long on bitcoin.

After getting a taste for it, Musk turned his attention to the little-known dogcoin. After the 200-fold increase in dogcoin over a year, Musk announced that he would use the money raised from dogcoin to launch a moon satellite next year.

Bitcoin collapses, cottage coins savagely harvest leeks, who will fix the bandwagoners "Muskies"?

But why start cracking down on bitcoin and dogcoin at the height of the moment?

It is believed that it is easiest to get out of a bull market when financing is needed, and it is better to have a bear market when financing is not needed, otherwise all the money in the market will be cut off by speculators. At the same time, the overwhelmingly long crypto market will be targeted by regulation – Musk was asked to have tea after he was long on dogcoin, and once he stopped using Twitter. So now Musk is also starting to temper his words.

The bottom line is that at this stage of development, Musk needs to pay attention to the views of large institutional investors, many of whom are turned off by the bitcoin hype. Meanwhile, in the context of carbon neutrality, global institutions are “cutting emissions” from their portfolios. Tesla’s high ESG rating is fueled by the “clean tech opportunity” category, and perhaps Musk doesn’t want Bitcoin to hold him back today.

Bitcoin collapses, cottage coins savagely harvest leeks, who will fix the bandwagoners "Muskies"?

Matt Weller, head of global research at Goldman Sachs, told reporters that traders instead see the move (refusing to accept bitcoin payments) as a boon from Tesla’s perspective.

Goldman Sachs recently said that while Bitcoin benefits from greater liquidity, it’s possible that another, better-designed cryptocurrency will come later in the future due to its high energy consumption, lack of practical use and weaker ESG score.

Liquidity Tightens, Wary of a Major Crash

While ups and downs have always been the norm in the cryptocurrency world, the above-mentioned “harvest” may come more violently in this phase of marginal liquidity tightening.

Since October 2020, bitcoin has risen from $10,000 to nearly $50,000. Bitcoin is a high-risk emerging asset with high daily price volatility and frequent ups and downs, William, the chief researcher at the Euromoney Institute, told reporters. From an empirical standpoint, retracements that occur during a bitcoin bull market range from about 33% to 66% of the underlying trend direction advance and last for a week or several weeks at a time.

Bitcoin collapses, cottage coins savagely harvest leeks, who will fix the bandwagoners "Muskies"?

Even though Bitcoin has entered a bull market since January 2021, with a cumulative gain of nearly two times, it has frequently plunged, with daily maximum declines of more than $5,000 on at least seven days, and intra-day maximum declines of more than $10,000 on two consecutive days on Feb. 22 and 23. This time, the biggest bitcoin plunge was only $9,000.

The bigger concern at the moment is that with the high inflation figures, the US may be about to face a tightening of liquidity, and the once liquidity-stacked cryptocurrency world will naturally contract.

The U.S. inflation data released on the evening of May 12 greatly exceeded expectations, with CPI rising 4.2% year-over-year in April, a new high since September 2008. PPI rose 6.2% year-over-year, a record high since the data began to be tracked in 2010.

Federal Reserve Vice Chairman Clarida was surprised by the higher-than-expected inflation data and said the Fed would act if price pressures were not temporary.

When the overall liquidity is expected to tighten, the “big crash” in the cryptocurrency world is likely to come.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/bitcoin-collapses-cottage-coins-savagely-harvest-leeks-who-will-fix-the-bandwagoners-muskies/
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