The strengthening of the US dollar not only causes non US currencies to continue to decline, but also makes it difficult for the digital currency market to escape the disaster of a pond fish.On Wednesday, September 7th, Bitcoin plummeted by over 5% at one point, and although it regained its lost ground and slightly rebounded, it remained below the $19000 mark
The strengthening of the US dollar not only causes non US currencies to continue to decline, but also makes it difficult for the digital currency market to escape the disaster of a pond fish.
On Wednesday, September 7th, Bitcoin plummeted by over 5% at one point, and although it regained its lost ground and slightly rebounded, it remained below the $19000 mark.
Since the beginning of this year, the price of Bitcoin has accumulated a decline of over 60%.
The US dollar has been very strong this year, and other digital currencies have also struggled to satisfy investors.
The second largest digital currency, Ethereum, has also fallen by about 60% this year. On Wednesday, the digital currency experienced a drop of over 10%.
Numerous digital currencies have experienced a cumulative decline of over 80% since the beginning of this year. Currently, the total market value of global digital currencies has fallen below $1 trillion.
According to Contract Emperor data, in the past 24 hours, the cryptocurrency market has exploded to nearly 1 billion yuan, involving nearly 40000 positions.
Amidst the frenzy of digital currency decline, Poolin, one of the world's largest Bitcoin mining pools, recently issued a statement stating that it has suspended withdrawals, flash trading, and internal transfers due to liquidity issues.
The company states:
This measure is in line with our goal of protecting assets, stabilizing liquidity, and operating in the bleak crypto market, and we will continue to explore strategic alternatives with all parties.
Behind the sharp decline in digital currencies is the significant rise in the US dollar.
In the past three trading days, the US dollar index has exceeded the 110 integer mark in intraday trading. As a result, not only did emerging market currencies fall in response, but even developed market currencies such as the euro, pound, yen, and Canadian dollar continued to weaken. Since the beginning of this year, the sharp decline of digital currencies has also been closely related to the sharp rise of the US dollar.
The digital currency, which was once considered a safe haven asset by some investors, now seems to have lost its safe haven function.
Given that the Federal Reserve may continue to raise interest rates, the big bear market for cryptocurrencies is far from over. Chris Esparza, founder of VaultFinance under the Decentralized Finance (DeFi) agreement, stated that the Federal Reserve's imminent tightening of policies presents a "bad outlook" compared to the Special Currency.
In addition, US regulatory agencies are also preparing for stricter regulation of the digital currency market.
In July, Federal Reserve Vice Chairman Lael Brainard stated that the turmoil in the digital currency market has not yet posed a "systemic risk" to the entire financial system, but the government needs to fill regulatory gaps to protect consumers and investors and ensure market stability.
She said that Federal Reserve officials are closely monitoring the volatility of crypto assets, which exposes vulnerabilities related to leverage, liquidity, and settlement:
Despite the huge losses suffered by investors, the crypto financial system does not seem to be very large or closely related to traditional financial systems, to the extent that it poses systemic risks... Now is the appropriate time to determine which digital currency activities can be carried out by regulated entities under what restrictions, in order to firmly control their spillover effects on the core financial system.
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