The crypto-asset market is hurting badly, with the $2.2 trillion market cap supported by more than 7,400 coins evaporating $770 billion in a week, and the main support Bitcoin (BTC) market cap falling from $853 billion to $678.4 billion, but the market cap share rising from 37.96% a week ago to 46.2% at the moment.
BTC has once again proven its dominance to the crypto asset market, and as it tilts down, all other categories of crypto asset market caps will be hard pressed to escape and shrink even more.
The news that has made the market nervous during the market down cycle continues. Now it appears that the May 13 news that “Tesla suspended its plan to accept bitcoin payments” was just a prelude. The nervousness in the market was further exacerbated by the Chinese financial regulator’s crackdown on virtual currencies and bitcoin mining and trading.
A number of domestic business entities involved in bitcoin mining and trading are responding, and a lot of gossip and rumors have emerged during this period. The panic continued to spread and spread through the market decline, which in turn caused further capital flight and market decline. And as the market crashed, the bitcoin giant whales began to move in to sweep the market.
Bitcoin’s rebound is feeble, market panic intensifies
Although bitcoin rebounded from $31,000 overnight yesterday (May 23rd BST) to over $36,000 today, the strength was clearly lacking, i.e. it failed to recover to the high of $43,000 from the 19th plunge, nor did it return above the EMA200 (moving index average) of $41,000. This indicator is the key for many market analysts to determine the bull and bear indicators of the market.
After May 21, the 4-figure BTC has never been seen again. This means that BTC is only less than 1x up from the peak of the last bull market into $2,000, and has fallen 43.75% from the peak of the current bull market at $64,000, with the drop once expanding to 54.6% on the 19th.
After Bitcoin’s multiple failed attempts to reach $40,000 in 3 days, the market’s pessimism is getting stronger. On Weibo, KOLs who previously continued to sing bullishly during the rally were also mocked by their fans as ‘facepalming’. Among the market investors, some said they had bailed out of their positions, while others thought “it seems pointless to liquidate their positions after losing 80%.
Bitcoin’s downfall directly led to the crypto asset market evaporating $77 billion in a week, except for the third-ranked dollar stable coin USDT, which will not fluctuate too much itself in terms of market capitalization, Bitcoin’s market capitalization shrunk by 20%; the second-ranked Ether (ETH) evaporated by 34.5%; ADA overtook BNB to rank fourth, but its market capitalization also shrank by 33.8%; BNB’s market capitalization fell by 45% .
The data platform’s non-smaller concept gain list shows that in the last 7 days, the platform coin segment, which includes 46 total asset species, has fallen more, with a 29% drop in 7 days; the 12 DeFi derivatives segments included have fallen 32.7% in the week; the PoS concept segment has fallen more than 33%.
Investors’ panic continued to grow as the crypto asset market rebounded weakly and the decline expanded. As a crypto asset market ‘vane’, Bitcoin’s market panic/greed index tends to reflect the overall market sentiment, and Alternative data shows that on May 24, the panic/greed index was 10, indicating extreme panic. A month ago, it was 37, which is still a panic level.
BTC Panic/Greed Index of 10 (Extreme Panic)
Bitcoin’s Panic/Greed Index is an index of market sentiment analyzed on a daily basis with different data. The data used to calculate the index includes coin price quotes, trading volume, social media, bitcoin market cap weighting (higher BTC weighting means investors are buying BTC to hedge their bets and the more panicked the market is), internet search trends, and other data. Between panic and greed, a lower index means the market is more panicked and a higher index means the market is closer to greed.
Today’s “10” means that the market’s panic level is approaching an extreme value, and some microblogging KOL helplessly teased, “If you panic again, it’s going to reach 0, it’s exploding.
China’s regulatory stance, a significant flight of capital
This round of market panic, in addition to the main cause of the continued decline in prices, is also stimulated by the news level.
The announcement by Tesla on the 13th of this month that it was “suspending its plans to accept bitcoin payments”, coupled with the company’s founder Musk’s later backtracking on his bitcoin chanting, saw BTC plummet 14% from $57,000 to below the “head of 5” in two or three days.
Glassnode data monitoring showed that coins on small BTC addresses were moving to exchanges, implying that a large number of retail investors were selling their holdings.
On May 18, the Internet Finance Association of China, the China Banking Association and the China Payment and Settlement Association jointly issued an announcement warning the public to “guard against the risk of speculation in virtual currency trading”. The three associations were seen by the market as a signal from the financial management to release strict regulation.
The announcement re-emphasized that virtual currencies are virtual commodities and do not have monetary attributes such as legal compensation and compulsory; at the same time, it “pointed out” that payment companies, banks and insurance companies are not allowed to conduct business related to legal currencies and virtual currencies, and suggested that illegal conduct would be suspected of criminal activities such as illegal fund raising, illegal issuance of securities and illegal sale of tokens and coupons.
Some within the blockchain and crypto-asset industry saw this as a signal for regulation to tighten the entry and exit of fiat currencies into and out of the crypto-asset market. The following day, May 19, BTC sank to $29,000, brewing the biggest crisis moment of the bull market’s decline.
If the joint statement of the three associations was just a signal, the fifth meeting of the State Financial Stability Development Committee on May 21 became clearer both in terms of the level of regulation and direction. This meeting, among the requirements to “resolutely prevent and control financial risks,” explicitly proposed to “crack down on bitcoin mining and trading practices, and resolutely prevent the transmission of individual risks to the social sector.
Bitcoin became a keyword, and both mining and trading practices were among the crackdowns. The stakeholders interviewed by Securities Daily believe that Bitcoin’s impact on three aspects, such as carbon neutrality, capital outflow channels, and illegal financing using Token (crypto digital coins), caused the heavy-handed regulatory crackdown.
Also after the regulatory voice, BTC once again saw a drop, from near $40,000 after a rebound, falling below the $36,000 and $32,000 mark for two days in a row.
Some rumors also took advantage of the panic, and all three HBO platforms were rumored to close the OTC channel for mainstream assets, and each had to take turns to dispel the rumors. As of May 24, the OTC channels of the three trading platforms were normal.
However, Tokenview on-chain data monitoring shows that in the last 5 days, there has been a significant outflow of bitcoin from the centralized exchanges. Among them, Bitcoin outflows from FireCoin are the largest, with the daily inflow-outflow ratio changing from 37:63 to 13:87; while Bitcoin flows from the CoinExchange are in reverse, with the daily inflow-outflow ratio changing from 45:55 on May 19 to 54:46 yesterday, with inflows currently outweighing outflows. Overall, bitcoin outflows on centralized exchanges increased by 52.2% yesterday compared to the previous day.
Some companies involved in the bitcoin mining business reacted more quickly than trading. A customer service message came out of FireCoin Mall saying, “In order to comply with the latest industry regulatory policies in China, the mall has decided to suspend the provision of mining machines and derivative services for users within mainland China. For users who have purchased BTC mining products (including ‘mining machine + hosting’, ‘one-stop’ and ‘worry-free mining’), the provision of hosting services for mining machines will be suspended and the machines will be taken offline from 23 onwards.
FireCoin related personnel said to the public, “Since this year, the pace of globalization of the mining mall business is increasing, in order to focus on expanding overseas business, the mining mall has decided to suspend the provision of related services for users in mainland China. The solution for mining machines held by old users will be notified to customers later.
The mining pool segment of the mining industry performed steadily, with bitcoin arithmetic power still concentrated in mining pools with Chinese startup backgrounds such as Ant Pool, Fish Pool, Coinprint and ViaBTC. OKLink data showed that these four pools had a 59.51% share of network-wide burst blocks.
The panic brought by the decline and regulatory news has to the cryptocurrency market suffered a waist-deep collapse. At this point, overseas investment institutions are seeing sweeping action, and a member of Morgan Glass Digital disclosed that he analyzed Glassnode data and found that bitcoin giants holding between 10,000 and 100,000 BTC bought a total of 122,588 BTC since the market crash last Wednesday.
Bloomberg sources say that some funds did participate in the buying during the drop and that they were actually bottom buyers, including London-based MVPQ Capital and ByteTree Asset Management, as well as Singapore’s Three Arrows Capital. Kyle Davies, co-founder of Three Arrows Capital, said, “Every time we see a lot of liquidation it’s a buying opportunity, and I wouldn’t be surprised if Bitcoin and Ether could retrace their entire decline in a week.
Chinese investors in the crypto asset market still seem to be waiting for more enforceable news from regulation. In their view, gloom will continue to hang over until that sword of Damocles falls.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-cryptocurrency-market-panic-is-raging-and-the-giant-whales-are-taking-advantage-of-the-situation-to-sweep-the-market/
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