Edited by: Bi LumingSince the beginning of this year, the coin industry has been buzzing with thunder, continuously staging a super storm.On August 27th, the price of Bitcoin plummeted sharply, dropping nearly $900 during the day, reaching a low of $19931, the highest point since April 14th at $64900 this year, a drop of over 69% and a new low since July 14th
Edited by: Bi Luming
Since the beginning of this year, the coin industry has been buzzing with thunder, continuously staging a super storm.
On August 27th, the price of Bitcoin plummeted sharply, dropping nearly $900 during the day, reaching a low of $19931, the highest point since April 14th at $64900 this year, a drop of over 69% and a new low since July 14th. According to Watcher.Guru data, the global cryptocurrency market has lost $70.63 billion in market value over the past 24 hours. As of press release, Bitcoin was trading at $20005.22, down 1.2%.
At the same time, the futures contract market is constantly bursting. According to data from the currency industry, virtual currency contracts sold out nearly 2.8 billion yuan in one day, affecting 100000 people, with the largest single position sold out reaching 10.99 million US dollars.
On the evening of August 26th, Federal Reserve Chairman Jerome Powell stated in his 8-minute speech that the United States is likely to continue raising interest rates. After Powell's comments, not only did US stocks plummet, but the entire cryptocurrency also collapsed.
Virtual currency crashes across the board
After a week of dragging around at the $20000 level, on August 27th, Bitcoin prices plummeted by nearly $900, dropping as low as $19931, a drop of over 69% from the year high of $64900 on April 14th. As of press release, Bitcoin has rebounded in the short term and is currently priced at $200005.22.
Image source: Sina Finance
According to China Securities News,According to data from the currency industry, virtual currency contracts sold out nearly 2.8 billion yuan in one day, affecting 100000 people, with the largest single position sold out reaching 10.99 million US dollars.
Image source: Coin Industry
Glassnode data shows that Bitcoin trading activity has reached a new low since the beginning of this year, and Bitcoin trading activity is moving towards the bottom range of this year, with the number of followers gradually decreasing.
Alternate.me shows that on August 27th, the panic and greed index was 28, with a slight decrease in panic levels compared to yesterday, and the level remains panic. In the past week, the panic in the Bitcoin market has been particularly severe.
Industry insiders believe that due to the close correlation between US stocks and cryptocurrencies in recent months, it indicates that the Fed's attitude has penetrated into the virtual currency market, which is the reason for Bitcoin's recent sell-off. The liquidation of long positions in the Bitcoin perpetual futures market may also exacerbate this trend.
Former CEO of BitMEX, Arthur Hayes, previously stated that $20000 and $1000 respectively represent price support levels for Bitcoin and Ethereum, and if breached, it would trigger "significant selling pressure". Sam Callahan, a Bitcoin analyst at the Bitcoin Exchange Swan, also believes that based on previous experience in the virtual currency bear market, Bitcoin may fall by more than 80% from its historical high. This means Bitcoin will drop to $13800.
Bitcoin still has downward space
In mid December 2020, Bitcoin, which broke through $20000 for the first time, completely ignited investor enthusiasm, initiating a year long surge pattern, and in November 2021, it briefly approached $69000, setting a historic high. Entering 2022, the market took a sharp turn and Bitcoin prices plummeted all the way down, breaking through investors' psychological defenses on June 18th. The massive sell-off prompted Bitcoin prices to further fall below $18000 on June 19th. Subsequently, Bitcoin prices stabilized and rebounded slightly, rebounding to a high of 25205 in mid August.
According to the Securities Daily, Yu Jianing, co chairman of the Blockchain Special Committee of China Communications Industry Association and president of Huoda Education, told reporters that the current market is at the bottom of the market when the Federal Reserve raises interest rates. The high CPI in the United States means that the Federal Reserve's previous policy of raising interest rates has not effectively alleviated domestic inflation pressure, and may adopt more radical policies in the future. There is still a great deal of uncertainty regarding the number of subsequent rate hikes, benchmark interest rate adjustments, and scale of scale reductions by the Federal Reserve. The global financial market is facing challenges, and Bitcoin is also affected as a result.
"Many mainstream crypto asset prices are still reflected by the stable currency anchoring the US dollar, which is greatly affected by the US dollar policy and the US market. To some extent, it can be regarded as the secondary market of mainstream trading markets such as the US stock market. Such a sharp drop in bitcoin is affected by the risk of the US economic recession, and thus transmitted to the crypto asset market." Zhao Wei, a senior researcher at the European Institute of Trade, told reporters.
Image source: Photographic network-501024898
Affected by the Federal Reserve's interest rate hike, as highly volatile cryptocurrency assets, virtual currencies such as Bitcoin are susceptible to market panic and are being sold off. "Chen Xiaohua, a major project review expert for the Internet blockchain at the Ministry of Industry and Information Technology and executive director of the Metaverse Industry Collaborative Innovation Center at Beiyou Technology Park, told reporters that from the overall tone of the global investment market, Bitcoin has not shown a clear signal of recovery, and prices may further decline. Yu Jianing believes that if the Federal Reserve adopts stricter interest rate hikes to curb inflation, it may further decline in the future.
According to China Securities News,Coinbase predicts that trading volume may become even weaker in the third quarter of this year, with an average monthly trading user range of 7-9 million.
Multiple virtual currency investment institutions have recently announced large-scale layoffs, including virtual currency lending platform BlockFi, virtual currency trading platforms Crypto.com, Gemini, and Buenbit, a trading platform headquartered in Argentina. Among them, Buenbit laid off 45% of its employees in May.
The industry believes that the collapse of the virtual currency market represented by Bitcoin will not have an impact on global economic development. Yu Jianing stated that on the one hand, the total market value of the crypto asset market is less than trillion US dollars, and its volume is relatively small, making it difficult to affect global economic development. On the other hand, the connection between the crypto asset market and traditional financial markets is relatively weak, and its volatility is unlikely to spread to the real economy.
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