Bitcoin scare night: Musk goes down, cryptocurrency ring calls for shorting Tesla

When market participants are convinced that it will not fall, it is exactly when the bull market break-up song is played.

Bitcoin scare night: Musk goes down, cryptocurrency ring calls for shorting Tesla

Bitcoin, pushed up by the post-epidemic super liquidity, once again showed its bloody menace to new entrants with a single-day drop of over 30%.

According to AICoin data, as of 11 p.m. on May 19, the blowout reached $6.4 billion (roughly RMB 41.1 billion) in 24 hours, far exceeding the blowout during the sell-off stampede under the epidemic panic on March 12, 2020.

The loose close seemed to be caught off guard, but everything has been in place for a long time. The founder of a head exchange hinted to Tencent News “Dive” that the dogcoin and SHIB binge shortly before this signaled that the market had gone into a frenzy and that a crash could happen at any time.

Everything is déjà vu, the founder commented, “The same scenario happened in the last bull market, and it happened in A-shares or overseas stock markets. When the values revered by the core blockchain circle are being dissipated and fall into a mindless frenzy, that’s when the banquet ends.”

Jiang Zhuoer, founder of Lepit Mining Pool, warned that since the cryptocurrency circle is a global market without any meltdown or regulation, with all kinds of high-futures options, all kinds of collateralized lending, and countless crazy high leverage, the stampede is bound to happen again and again and again.

But some of those who still have money left over have already set out to re-borrow funds and prepare for the bottom. Lead brother Musk has also started to maintain stability on social media, “Tesla has diamond hands,” meaning bitcoin that was not sold out of its position at the time of the crash.

A slew of investors who followed Musk’s lead in buying bitcoin or dogcoin apparently didn’t buy it because of the near-withdrawal in recent days, with the most liked message writing, “Elon, I hate you, you made me lose my life savings.”

From announcing Tesla’s support for Bitcoin payments and changing his Twitter signature to Bitcoin to questioning the way Bitcoin mining wastes energy, Musk’s repeated attitudes towards the number one crypto asset in terms of market capitalization has caused a host of cryptocurrency fans to reverse their attitudes towards it as well. Some of these voices have started calling for Tesla to be shorted in social media to avenge Musk’s “disruption” and “market manipulation” of bitcoin.

Industrial capital pushes social media to help
Starting with the super liquidity after the epidemic, crypto assets such as Bitcoin started to gain popularity in the late 2020s with funds and industrial capital, including Grayscale and microstrategy, and after real money was invested, the price of Bitcoin saw continued gains.

Grayscale Asset Management (Grayscale Investments) is a subsidiary of Digital Currency Group (DCG), a digital currency group, established in 2013. What makes Grayscale special is that it provides investors with a channel to legally trade cryptocurrencies. With a US stock account, they can trade GBTC, a crypto asset trust set up by Grayscale, in the secondary market like a stock, without having to consider the complicated process of entering and exiting the cryptocurrency exchange.

In addition to this, public companies, including microstrategy, also started to eye bitcoin in 2020. Microstrategy, which had been losing money, relied on its continued investment in bitcoin and the inclusion of bitcoin on its balance sheet to achieve a “comeback” in the company’s stock price, and its CEO Michael Seiler became one of the 12 new cryptocurrency billionaires added to Forbes’ list. With multiple additions, microstrategy’s latest data shows a total purchase of 91,850 bitcoins, with a total cost of $2.24 billion for the position and an average price of $24,403.

The second half of the cryptocurrency bull market was fueled by Musk. in February 2021, Musk, who had just commanded retail investors to chip in Gamestop to short Wall Street, began to frequently promote bitcoin on social media, first changing his signature line to “bitcoin” and then his company Tesla, which he founded, announced the purchase of $1.5 billion worth of bit and announced that it would accept bitcoin for car purchases.

With real money and widespread social media influence, the price of bitcoin is once again climbing to record highs.

Leaders of the cryptocurrency civil war are being backstabbed
But Musk’s real intentions are not in Bitcoin, but in Dogcoin. Back in 2019, Musk called himself the honorary CEO of Dogcoin on Twitter and has since been in contact with the Dogcoin development team, offering to fund the development of Dogcoin, but the development team politely declined the offer.

In his conversations with the team, Musk focused on suggesting they increase the transaction throughput of Dogcoin. Bitcoin is limited to a 1M block size by design, and transaction throughput can only support about 6 transactions per second, which is seen as the biggest weakness of Bitcoin as a payment tool. Increasing the transaction throughput of dogcoin addresses this weakness of Bitcoin.

Three months after taking a stand in favor of Bitcoin, Musk snapped in May, attacking Bitcoin mining for consuming too much energy, so Tesla suspended the use of Bitcoin to pay for car purchases and considered using a less energy-intensive cryptocurrency.

Musk then supplied the same decentralized features that Bitcoin has been touting, “Bitcoin’s arithmetic is highly centralized, and it’s surprising that a power supply obstacle in a single region has reduced Bitcoin arithmetic by 35%, which is clearly not decentralized.”

At the same time, he noted that dogcoin could speed up block times by a factor of 10, increase block sizes by a factor of 10, and reduce fees by a factor of 100 in an ideal car situation.

Musk’s one-two punch sparked a new civil war in the cryptocurrency world. He even asked his fans directly on Twitter whether Tesla should accept dogcoins as a payment method. Of the nearly 4 million people who participated in the poll, 78.2% expressed support.

But the move to sit on public opinion to try to pull Bitcoin off the pedestal made Musk feel the backlash as well. The spike in dog coins eventually triggered an orgy that saw animal coins like Shiba Inu and pig coins skyrocket tenfold in a day, and soon saw the end of the song. on May 19, animal coins like Shiba Inu and pig coins basically fell back to their original form, and many fans who followed Musk began to divide and leave messages on social media saying that Musk had made him lose his house and family and become a homeless man with no one to depend on.

KOLs in the Bitcoin community also began attacking Musk, even Dogcoin co-founder Jackson Palmer accused that Musk has always been a gambling fraud and will always be one.

“The public itself was making decisions based solely on whether or not that symbol was tied to a hot spot, but by the time the frenzy faded, Musk had changed from a god back to a man.” So commented the aforementioned exchange founder.

The shadow of frozen cards looms over cashing out as a problem
After China’s three major industry associations collectively issued a voice to rectify the virtual currency chaos and prompt the risk of speculation, on May 19, the Matcha MXC exchange, which still provides an entrance for fiat currency purchases in the country, suspended OTC over-the-counter transactions. In addition, Bitpac, which is mainly in the wallet business, also announced the suspension of OTC trading on May 18.

This also means that providing an entrance for direct purchase of virtual currencies in RMB has attracted high regulatory attention. The three associations stressed that the public should strengthen their awareness of risk prevention, cherish their personal bank accounts and not use them for activities such as topping up and withdrawing funds from virtual currency accounts, buying and selling relevant transaction top-up codes and transferring relevant transaction funds, so as to prevent damage to their personal funds.

Since its inception, Bitcoin has become a well-known alternative asset known and traded by more and more people, with prices climbing since its inception, despite huge price fluctuations from time to time. The other side of the coin, Bitcoin’s semi-anonymity, has become a hotbed for certain criminals to hide their identities, transfer funds and evade foreign exchange controls. Especially since 2017, when several countries, including China, cut off the way to buy digital assets such as bitcoin in fiat currency, a variety of 1:1 anchored US dollar stablecoins such as USDT and USDC have become the basic tools of the cryptocurrency world, providing a more convenient and risk-free channel for the above acts.

Since 2020, with the Ministry of Public Security, the Central Bank and other departments joining hands to crack down on the governance of cross-border gambling fund chain operations, money laundering and fund transfer with the help of virtual assets such as Bitcoin and stablecoins are being regulated more closely. Once involved in the chain of transmission of certain illegal funds, such as selling virtual coins at suspected OTC merchants, or after being judged by banks as abnormal transactions, a bank card freeze will be triggered for a period ranging from three days to two years. In some cases, the public security department will be instructed to cooperate with the investigation and explain the origin and context of the funds.

The tide of frozen cards swept through, and despite the rising price of coins at the end of the year, the circle was in a state of panic, and OTC merchants were at risk. A senior player complained to Tencent News “Subliminal” that he started buying boldly from the low point of bitcoin price in March, and then bet on some DeFi concept assets, earning more than 10 million this year, but the experience of his friends around him generally being frozen cards made him afraid to try to liquidate easily, so he had to switch to stable coins and put them in the exchange.

The risk of money laundering caused by virtual assets, especially stable coins, is the root cause of the freezing of cards in the entire cryptocurrency world.

A virtual asset wallet founder told Tencent News “Subliminal”, “the first few years the coin circle people are not so mixed, so KYC is better to do, but these two years mixed, there are some fraud, gambling and even drug-related funds, through a variety of disguises want to use virtual coins to wash out, the slightest carelessness will be hit.” An OTC merchant specializing in over-the-counter trading of virtual assets described to Tencent News “Subliminal”, although this part of the funds account for a very small and small percentage, but once involved, the entire upstream and downstream of the funds dissemination chain will be implicated, resulting in frozen cards or even more serious consequences.

“The biggest problem in the past two years is that all the cats and dogs have entered the coin circle, and they can’t get involved with these people.” Another merchant engaged in OTC for many years complained that initially when doing this business, the most audit of customers is to prevent telecom fraud funds, but because of the rise of offshore gambling, piggy banks, these “cats and dogs” are behind the money involved in gambling and even drugs, want to achieve the purpose of cross-border transfer of funds or money laundering through over-the-counter transactions.

“A little carelessness, there are 37 days package waiting for you, or even directly into the criminal.” The merchant described a peer who was treated as a gambling-related money broker because of incomplete KYC implementation, cooperated with the public security department’s investigation for 37 days to prove his lack of knowledge before he was released, and the bank cards of the speculative players who traded with him were frozen.

At a conference held in September, Liao Jinrong, director of the International Cooperation Bureau of the Ministry of Public Security, introduced the situation of combating and managing cross-border gambling crimes. He revealed that, according to preliminary statistics, the annual outflow of gambling-related funds from the territory exceeds one trillion, which continues to aggravate economic and financial security risks against the backdrop of the current increased economic downward pressure. From the criminal form, some gambling-related groups use virtual coins to collect and transfer gambling funds, and even in some areas of Myanmar on the pretext of investment, the reality of online gambling. This new type of channel cannot be frozen and anonymity is difficult to trace, which poses a great challenge to the fight.

The Central Bank disclosed in October that the central branch of the People’s Bank of China in Huizhou assisted local police in cracking a cross-border online gambling case using the virtual coin TEDA coin (USDT). Seventy-seven suspects were arrested, three gambling websites were broken up, and the amount involved was nearly 120 million yuan. The case not only flowed within bank accounts, but also involved virtual currencies and went through multiple launderings, with the funds going extremely hidden.

“We are now trying pure transactions, which simply means that every money and every coin handled has to be audited separately, but this is just an ideal, if every flow has to be audited, basically 99% of the users have been blocked out.” The aforementioned virtual asset wallet founder said that under the regulatory tightening trend, OTC merchants are getting worse and worse.

In order to avoid the bank card is frozen, speculative players internal summed up a lot of experience, for example, do not use the salary card, commonly used cards for trading, if once frozen mortgage car loans will be broken, credit will also be a problem, and do not use the card of large banks, because the risk control is more stringent.

A similar experience is the flow of funds to overnight, a more advanced practice is to buy and sell through different bank cards, the funds from the sale of coins immediately buy into financial products, and then withdraw cash.

Tencent News “subliminal” from close to the regulatory sources learned that the central bank and the foreign exchange bureau of the aforementioned risks have long had a sound regulatory approach, but also a special division directly responsible for, “for example, the class of stable coins Libra the day of the release of the white paper, we asked them to come on the risks involved to explain.” Under the trend of increasing regulation of anti-money laundering and combating cross-border gambling capital flows, the crackdown on gray behavior in the cryptocurrency world will only get stricter in the future.

This also means that the wave of frozen cards may only be the beginning. “Compliance is the only way forward.” A co-founder of a head exchange told Tencent News’ Subliminal that exchanges need to do a better job of gate-keeping at the source and conduct stricter audits of OTC merchant access qualifications.

Under the high pressure situation, the shadow hanging over the head of the speculative players is difficult to dissipate. One insider predicted that players involved in coin speculation may all experience the first frozen cards in their lives in the last year or two.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/bitcoin-scare-night-musk-goes-down-cryptocurrency-ring-calls-for-shorting-tesla/
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