“I’m numb, I bitcoin long single burst.” At noon on May 19, manager Chen, who was engaged in live streaming, told Deep Chain Finance on the phone that it was too difficult to make money in the cryptocurrency world, and that he originally saw the market improve and opened long orders of BTC, ETH, XRP and DOT continuously.
Originally, seeing the unstable market, Manager Chen intended to slowly close all the contracts that night.
A sudden plunge disrupted all of Manager Chen’s plans.
When he called again, it rang for a long time before anyone answered.
“Why, is it so hard to make some money in the cryptocurrency world?”
Manager Chen’s contract, without having to ask, could guess that none of them were kept.
Manager Chen was unlucky, and just yesterday, there were 570,000 people like Manager Chen who were unlucky.
- Bitcoin Flash Down 10,000 Knives, 570,000 Contracts Explode
On May 19, all hell broke loose in the cryptocurrency space.
At eight o’clock that night, bitcoin began a dramatic decline, from near $40,000, plunging in a straight line to a low of $29,000, an instantaneous drop of up to 30%, compared to its all-time high of $64,800 on April 14, a drop of even more than 55%.
Along with the plunge in bitcoin, the entire broader market also faltered.
Almost all cryptocurrencies you can name, including ETH and DOT, have seen drops of more than 30%, with many coins like ETC and ATOM falling by more than 50%.
In an instant, the total market value of cryptocurrencies dropped from $2.12 trillion on that day to a minimum of $1.56 trillion, disappearing $560 billion in just two hours, equivalent to the fall of an Alibaba.
At the same time, “cryptocurrencies collapse across the board” reached the third place on Baidu’s hot list, while the topic of “cryptocurrency collapse” also once reached the third place on Weibo’s hot search.
In addition, like a thunderstorm on the ground, the plunge of the spot also led the cryptocurrency contract players to the “rooftop” step by step ……
Just yesterday, data showed that the contract market had over 570,000 people burst their positions in the past 24 hours, including $2.64 billion in bitcoin and $1.64 billion in ethereum, with the largest burst worth $67 million. The blowout amounted to $6.7 billion cumulatively. And this data, is last year 312 black swan contract blowout data about two times.
The strength of this contract blowout is amazing, and there are even some users who bad-mouth the exchange USDT selling merchants in order to deposit to cover their positions, and there are many contract players who didn’t have time to finish depositing fiat currency to cover their positions and cause the blowout to happen.
What’s more, due to the mass “stampede” caused by yesterday’s panic, exchanges including Firecoin, Coinbase, KarKen and others broke down, while Coinan directly issued a temporary maintenance announcement for leveraged tokens, suspending the trading of some leveraged tokens and suspending the subscription and redemption functions of all leveraged tokens.
In the face of the plunge, the centralized world is in danger, while the decentralized world cannot be left alone as well.
Debank data shows that the DeFi platform has cleared $662 million in loans in the last 24 hours, a level not seen since Feb. 22 of this year, compared to the normal $10 to $5 million that DeFi products normally clear.
The DeFi platform liquidated more than $33 million on Feb. 22 of this year, when bitcoin took a nosedive, falling more than $10,000 in a single day from $57,000 to $47,000. This liquidation amount expanded 20 times compared to February 22nd.
It is understood that if Sun Yuchen had not paid the $300 million loan in time, then his 600,000 ETH would have faced liquidation, and the amount of money liquidated by DeFi this time would have been even more impressive.
The drop in the broader cryptocurrency market has brought along with it a big drop in various blockchain concept stocks.
Among them, Riot Blockchain fell more than 16%, Coinbase opened down 12% and finally fell 5.9%. The stock price hit a record low. Shares of miner Cascade plunged 13 percent.
However, in the plummeting market, some institutions and individuals have expressed positive “protective” views.
Among them, JPMorgan Chase has publicly stated that it believes bitcoin has a “fair value” of $35,000. Although this price is a far cry from Bitcoin’s highs, JPMorgan’s voice has become somewhat of a “ballast” for Bitcoin’s price as it fell below $30,000 last night and the risk of further declines has increased.
Interestingly enough, Musk, who publicly sang the praises of bitcoin not long ago, also tweeted a rare tweet saying, “Tesla has double diamond hands”. It is said that “diamond hands” means “someone who is a firm holder of a certain asset”. Thus, during the bitcoin crash, some interpreted the tweet as meaning that “Tesla will hold bitcoin firmly”.
Two policy makers at the Federal Reserve also said on Wednesday that a sell-off in cryptocurrencies, including bitcoin, would not pose a broader risk to the financial system. To a certain extent, it also provided a piece of mind for market sentiment.
Perhaps the above positive statement played a role, or perhaps yesterday’s downward momentum came to an end. Everyone breathed a sigh of relief last night when bitcoin started to recover after dipping below its $29,000 low, and with it the broader market as a whole.
However, despite this, the plunge that happened last night still has people in stitches.
- The plunge is both accidental and in fact inevitable
There are many different opinions about the cause of the plunge, some believe it is a process of de-bubble, while others believe it is a shortfall caused by national regulatory news.
What’s more, Twitter user Seigneur Sith said that yesterday’s plunge was caused by the institution he works for joining Chinese institutions in a collective shorting of a giant predator. However, the user refused to disclose more information about the institutions involved.
“In fact, I am very much against the plunge after so many people, as always, to find the reason, because that is all small leek thinking.” Analyst Andy told Deep Chain Finance, “In fact, I have issued top escape signals several times from April 18 to May 14.”
In Andy’s view, the current round of the market in the high shock contention for two months, especially after the new high 4.18 plunge has weakened, and after a long period of horizontal trading technical surface of the main trend technical indicators broken, the disk does not lie, as long as you interpret it with care, coupled with the large investors profit taking, due to the hot animal coins led to irrational influx of people outside the circle, coupled with the fundamentals are no longer so positive, so it led to the acceleration of the decline .
“Once the big players are gone, the market can’t hold up by small investors.” Andy believes that this bull market, which ended after bitcoin reached $64,800 on April 14, will take some time to digest if it is to rise above new highs before it can be called a bull market.
Of course, how long will it take for bitcoin to digest, and will it be months or years? It’s hard to say.
Independent trader Wei Zhicheng also has his own opinion about the crash: people bought BTC to make money, and after nearly 3 months of not making much money from the February high, as soon as a handful of funds started to cash out, a chain stampede was formed.
In addition, William, a researcher at OKEx Research Institute, said that bitcoin has been in a weak pattern recently for a number of reasons.
First, bitcoin’s biggest gain since last March has been more than 1600%, and the market has accumulated a large number of profit-taking discs, with institutions even more profitable, increasing pressure to cash out their profit-taking discs.
Second, although the Federal Reserve continues to maintain the current ultra-loose monetary policy, but investors are concerned that inflation may get out of control if it continues, increasing investor risk aversion.
Third, domestic and international agencies have been talking about preventing the use of bitcoin for money laundering and financial risk prevention. The combination of the above-mentioned shortcomings will cause the cryptocurrency market to fall significantly.
In addition to cryptocurrencies themselves, it is widely believed that the “originator” of this decline is the increased regulation by the Chinese government, with many even comparing May 18 of this year to September 4 of 2017.
On May 18, the China Internet Finance Association, China Banking Association and China Payment Clearing Association jointly issued an announcement on May 18 about preventing the risk of speculation in virtual currency trading.
The announcement clarified that relevant institutions shall not carry out business related to virtual currency, financial institutions, payment institutions and other member units shall not use virtual currency to price products and services, shall not underwrite insurance business related to virtual currency or include virtual currency in the scope of insurance liability, and shall not directly or indirectly provide other services related to virtual currency for customers.
On the same day, Inner Mongolia Autonomous Region’s Office of Dual Control of Energy Consumption Emergency Command issued an announcement on the establishment of a reporting platform for virtual currency “mining” enterprises.
On May 19, the Inner Mongolia Development and Reform Commission re-emphasized the enterprise reporting announcement, stating that supervision continues to be high pressure.
This, coupled with the earlier erratic nature of Musk and the “epileptic” nature of Dogcoin and SHIB, has to some extent damaged the fundamentals of Bitcoin.
The multiple triggers, along with the tightening of regulation, caused panic in the industry and ultimately led to the May 19th plunge.
- How do bulls and bears grasp?
To sum up, this plunge of bitcoin and cryptocurrencies, although there are some accidental factors, but to a certain extent is also inevitable.
For example, jenny, a programmer of quantitative trading platform, has said that if bitcoin can still hold up when it falls 50% from its peak, then there is still some hope. This view is echoed by Wei Zhicheng, “If the waiver goes over the top there’s not much hope.”
At the same time, Jenny also cautions users to expect the best and prepare for the worst.
However, while some are pessimistic about the future of Bitcoin, there are those who express optimism.
For example, Old Cat, in an article titled “The Mad Bull is Coming,” said, “The beginning of the mad bull, by today (May 20), the grayscale set the wave, and the dollar leads the way.”
In his opinion, the price of bitcoin depends on supply and demand, with the market being a polling place in the short term and a weighing machine in the long term. The movement of the bitcoin price depends on the total amount of real-world money and on the continued development of big government, small private power.
And as the dollar continues to add up and inflation intensifies, every government has a million reasons to print money, and that is certainly a permanent boon to digital currencies.
In addition, even Andy, who believes the bull market is over, advises coin holders to wait and see in the short term, but resolutely not to cut, being set for 3 years and 10 times.
In fact, it has been debated within the industry as to when exactly the end of this bull market will be.
Since the bull market opened in 2020, bitcoin’s market capitalization has continued to decline as a percentage, from a high of 71% in January 2021 to less than 40%.
To some analysts, 40% is a key indicator of bulls and bears in the cryptocurrency market. During the 2017 bull market, bitcoin’s market cap share fell below the 40% position twice. Once was in June 2017, after which the market went into a bull run. The other time was in January 2018, after which the market entered a bear market.
Although many industry insiders say that this year’s bull market will not necessarily be an exact repeat of previous indicators and directions, bitcoin’s market cap share falling below 40% still raises many investors’ concerns about the bull-bear transition.
Jenny said that digital currencies other than bitcoin could fall “very quickly” when bitcoin’s share reaches 40%, and warned users to catch the cottage season from 45% to 40%.
With the rapid rebound after the crash, bitcoin’s market cap share is back above 40% and is currently stable at around 42.29%.
So, to some extent, the entire market is not quite in an absolute bear market, and perhaps well-known cottage coins such as ETH and Boka Eco, have upside.
According to overseas blogger therationalroot, we are still in the middle of a bull market, and bitcoin will still create new heights.
In his opinion, if one composes the moment when the highest price of the previous bull market is exceeded as the beginning of the bull market and reaches a new price high as the end, then the bull cycle of 2013 went for 287 days and the bull cycle of 2017 went for 289 days.
If we use the analogy of the cycles of the previous two bull markets, at the moment, then this bull market should also last about 280 days.
And currently, only 171 days have passed since this bull market theoretically broke through the $20,000 high of 2017, and bitcoin’s price has not yet reached its highest.
On top of that, former Bitcoin China CEO Qiyuan Li said on January 3 of this year that this Bitcoin bull market might be a double top phenomenon like in 2013.
That is, the first small peak in bitcoin price occurred in April, then the first small peak removed some air and brought the price back down a bit, then rose again in the summer and fall. It finally reached its peak in December.
In terms of market direction, bitcoin has moved in line with Qiyuan Li’s expectations so far, but we still can’t make an accurate conclusion about the future of bitcoin and cryptocurrencies in general.
Perhaps all we can do is to follow the trend and make timely operations in our own interest, while users should also have a clear perception of themselves and understand the investment ideas they are good at and the maximum loss they can afford. Don’t be confused by the stories of riches circulating on the market, making money in the cryptocurrency world is actually not that easy.
“I will never open a contract again, really.” In a phone call with Manager Chen, who ate the contract loss, he vowed for the second time.
The last time, on Feb. 22 of this year, during the bitcoin crash, Manager Chen mortgaged his Mercedes Benz, and at that time he bet he would never touch a contract again.
And this time, the plunge saw Manager Chen lose another $3 million.
“In the past, when I was on the air, I always told the waterfellows that there is no snow on Wall Street, what is cold is the heart.”
“This saying, the same applies to the coin circle.”
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-wealth-of-cryptocurrency-you-cant-grasp/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.