Between May 12 and 13, BTC fell from $57,900 to a low of $45,750, with a maximum drop of more than 20%. ETH, LTC and other crypto assets also fell in tandem, with a heavy drop.
Under the current round of sharp decline, the long positions in the futures contract market suffered heavy losses. According to the data from the contract empire at 2:00 p.m. on May 13, the total amount of funds exploded in the crypto asset market within 24 hours was $2.56 billion, the highest amount of exploded positions in the past 20 days, of which the proportion of long positions exploded was over 80%.
Some analysts believe that Tesla founder Elon Musk’s tweet about Tesla suspending accepting BTC payments in the morning of the 13th was the trigger for the market’s accelerated downside. elon Musk changed his face and said that cryptocurrencies are a good idea, but mining is causing damage to the environment.
In addition, the rise of CPI (Consumer Price Index) in the U.S. brought bearishness to the U.S. stock and crypto asset markets. 12, the U.S. Department of Labor released data showing that CPI in the U.S. rose 4.2% year-on-year in April, significantly exceeding previous market expectations of 3.6% and growing at a higher rate than during the financial crisis in 2008.
CPI accelerated, which often means increased inflationary pressure. Industry insiders are worried that the U.S. may tighten monetary policy early as a result, and once the demand for capital hedging is released, it may accelerate the rhythm of the bullish turn to bear in the crypto asset market.
The market plunged 20% and Musk’s ‘change of face’ may be the cause
From May 12 to 13, the crypto-asset market once again experienced a gloomy moment. BTC started its continuous downward movement in the afternoon of the 12th, falling from $57,900 to a low of $45,750, shrinking $12,150 in single coin price, with a maximum drop of 20.98%.
BTC led the decline, and other mainstream assets also flew down. eth fell from $4332 to a low of $3500, a maximum drop of 19.2%, while LTC went down from $393 to $301, a short drop of 23.4%.
As of 2pm on May 13, the overall market rebounded, with BTC rebounding to $51,000 or less, but still down 12% compared to the previous day’s high.
The sudden plunge strained the nerves of market investors. Many people panicked and sold under the fierce long-short struggle, and the debate on whether the bull market is over started again. The comment section of various circles of big V bloggers is filled with “Is the bull market still here? The question of “Is the bull market still here? Some people chose to liquidate their positions or reduce their positions to avoid risk, while others were busy plunging to the bottom, expecting the market to come out of new highs again.
Compared to the spot position holders, the investors who were long in the futures contract market in these two days were undoubtedly the most hurt. According to data from the contract empire at 2 p.m. on May 13, the crypto asset market blew up a total of $2.56 billion in 24 hours, the highest amount in the past 20 days. A total of 224,688 investors’ positions were forcibly closed out across the network, with the proportion of long positions exploding exceeding 80%.
Market participants expect to find the motive for the plunge under the violent volatility of the market. And a tweet by Tesla founder Elon Musk was seen as the ‘culprit’ by market investors.
Elon Musk announced that Tesla suspended accepting BTC payments
In the morning of May 13, Musk announced through his personal Twitter that Tesla suspended accepting BTC payments. He said that BTC mining has brought about a drastic consumption of energy such as oil as well as coal, and although cryptocurrency is a good idea from several aspects, it cannot be done at the cost of damaging the environment. He also revealed that Tesla will not sell Bitcoin for the time being, and will seek less energy-consuming cryptocurrencies.
In terms of market movement, BTC did accelerate down after this tweet was released, with Musk and Tesla’s powerful IP showing influence on the crypto asset market and allowing investors to once again see the sway of institutional movements on the bitcoin market.
Some analysts believe that the announcement of the suspension of BTC payments with Tesla holding BTC amounts to a ‘suicide attack’. And there is no shortage of investors who have lost money as a result of the market decline, pointing the finger at Musk as the ‘shit-stirrer’ of the crypto asset market.
Makoto Sakuma, a researcher at the Nissen Institute for Fundamental Research, believes that Musk’s enthusiasm for cryptocurrencies may be waning.
Although the crypto world promotes the spirit of decentralization, in today’s crypto asset market, the attitudes of celebrities and celebrities towards crypto assets may still be the guideposts of the market trend.
U.S. Inflation Exceeds Expectations Financial Markets Watch Monetary Policy
During the selloff, the release of the U.S. CPI (Consumer Price Index) for April may also have an impact on the movement of the crypto asset market.
On the evening of May 12, the U.S. Department of Labor released data showing that with the U.S. economic recovery on track and energy prices soaring, the U.S. CPI rose 4.2% year-over-year in April, significantly exceeding previous market expectations of 3.6%, with the growth rate hitting a new high since September 2008. In addition, excluding food and energy prices, the U.S. core CPI rose 0.9% in April from a year earlier, the largest increase since 1981 and more than during the financial crisis in 2008. After the news, the 10-year U.S. bond yield once rose to nearly 1.7%.
Generally speaking, the accelerated rate of CPI growth means that the level of inflation is also intensifying. Affected by this, the three major U.S. stock indexes opened lower, the Dow fell by more than 710 points during the day, technology stocks were sold off first.
As of May 13 early morning closing, the three major stock indexes fell sharply, the Dow fell about 2%, the largest single-day decline since January this year; the S&P 500 index fell 2.14%, the largest single-day decline since February this year; the Nasdaq fell 2.67%, of which Tesla shares fell 4%.
According to Huang Han, partner of Retaining Bow Capital, the U.S. CPI surpassed expectations in April and inflationary pressure surged. The U.S. money market sees the probability of a rate hike rising to 88% during the year, and a global monetary tightening is coming.
Previously, the demand for capital hedging brought by the accelerated printing of money by the Fed was seen by the industry as a key factor for the rise in the crypto asset market. Now, the elevated level of inflation in the U.S. has somewhat triggered concerns about the early tightening of its monetary policy.
In this regard, the Fed’s attitude is not clear for the time being. on the evening of May 12, Fed Vice Chairman Clarida said that the economy is still far from the Fed’s target and it will take some time to make substantial further progress. But he was surprised by the higher-than-expected inflation data and said the Fed would act if price pressures were not temporary.
And in the view of Mark Zandi, chief economist at Moody’s Analytics, the rise in inflation largely reflects the reopening of the U.S. economy, “as the Fed has previously said, the rise in inflation is temporary and the Fed will not change its current monetary policy as a result.
In any case, the sharp increase in the US CPI is not exactly good news for the crypto asset market. Although the broader market seems to be temporarily stabilized at the moment, in the view of analysts, the Fed’s decision has become the sword of Damocles hanging over the crypto asset market, and once the monetary policy is tightened, the speed at which bulls turn to bears will also be accelerated.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-market-plunged-and-the-bull-went-away-again-2/
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