Bitcoin has plummeted again! As of 18:10 on January 24th, the price of Bitcoin has dropped below $34000 per coin, marking the first time since July last year. The past week has seen a drop of over 20%, and this year it has fallen by nearly 30%, almost halving from the historical high of $68928.9 in November 2021.Analysts point out that since the beginning of this year, the higher intensity of regulation by global regulatory agencies on cryptocurrency assets, including Bitcoin, as well as the strengthening expectations of the Federal Reserve's tightening monetary policy, and the widespread selling of US technology stocks, have been the main reasons for Bitcoin's sharp decline.Falling below $34000Coindesk
Bitcoin has plummeted again! As of 18:10 on January 24th, the price of Bitcoin has dropped below $34000 per coin, marking the first time since July last year. The past week has seen a drop of over 20%, and this year it has fallen by nearly 30%, almost halving from the historical high of $68928.9 in November 2021.
Analysts point out that since the beginning of this year, the higher intensity of regulation by global regulatory agencies on cryptocurrency assets, including Bitcoin, as well as the strengthening expectations of the Federal Reserve's tightening monetary policy, and the widespread selling of US technology stocks, have been the main reasons for Bitcoin's sharp decline.
Falling below $34000
In fact, the sharp drop in Bitcoin is no longer new. At the beginning of this year, Bitcoin hit a low of $43000 per coin, with a daily decline of 6.16%. From 23:00 on January 20th to 11:00 on January 21st this year, Bitcoin dropped from $43325.2 to $38465.3, a 12 hour drop of $4859.9.
On the afternoon of December 4, 2021, Bitcoin also briefly fell below $42000, with a 24-hour decline of over 20%. As of 20:00 on the same day, a total of 417000 people have been exposed in the past 24 hours, with a total of 2.584 billion US dollars in virtual currency network contract exposure, of which over 1 billion US dollars were exposed in Bitcoin within 24 hours.
The reporter learned that the price of Bitcoin reached a historic high of $68928.9 in November last year, and then began to decline. Looking at the overall trend of Bitcoin, it has become the norm for its currency to fluctuate violently. After breaking through the $60000 mark in mid April last year, Bitcoin underwent more than three months of deep adjustment, once falling below $30000.
In the long run, in 2013, Bitcoin surged to $1000 and then significantly retreated to $150. In December 2017, the price of Bitcoin rose to nearly $20000. However, in the following year, it suffered a significant decline, falling to nearly $3000. On January 4th last year, Bitcoin also experienced a sharp decline, reaching $29068.63 at 18:29, a 15.4% drop from its high of $34366.15 on January 3rd. According to data from Bitcoin Home Network, the entire network has a 24-hour exposure of 1.528 billion US dollars, equivalent to approximately 9.85 billion yuan, with a total of 107935 people exposed.
Why did it plummet
Why has Bitcoin plummeted this time? Some analysts point out that on the one hand, global regulatory agencies have strengthened their supervision over special currency since the beginning of this year. On January 17th local time, the Spanish National Securities and Markets Commission required influential individuals and sponsoring companies to report at least 10 days in advance when promoting activities, and warned against the risks of cryptocurrency, or face fines.
At almost the same time, the Monetary Authority of Singapore (MAS) stated that DPT (Digital Payment Tokens) service providers can only conduct marketing or advertising on their own corporate websites, mobile applications, or official social media accounts. Subsequently, the Financial Conduct Authority (FCA) proposed to reform the rules related to the sale of high-risk investments to the public in response to relevant financial risks. The reform draft includes details on how financial regulatory agencies manage cryptocurrency advertising.
The Russian Central Bank said it would propose to ban cryptocurrency transactions and mining, prohibit financial institutions from investing in cryptocurrency and related financial instruments, and use Russian financial intermediary and financial infrastructure for cryptocurrency transactions. In addition, the United States Securities and Exchange Commission (SEC) has made it clear that cryptocurrency exchanges will become its focus on digital asset regulation in 2022.
Pan Helin, Executive Director of the Digital Economy Research Institute at Zhongnan University of Economics and Law, analyzed to the International Finance News that the rise of Bitcoin is to some extent contradictory to the trend of the US dollar or the tightening policy of the Federal Reserve. From the current US inflation rate and the Federal Reserve's statement, the monetary tightening of the Federal Reserve is imminent. At this time, the price of Bitcoin is falsely high, and there is also a foam. Therefore, the strong foundation of Bitcoin has been destroyed.
Distributed Technology CEO Da Hongfei told International Financial News that in recent months, the trend of the cryptocurrency market has further increased its correlation with US stocks. The US benchmark interest rate, which affects global asset pricing, may undergo a directional shift in 2022. Investors have found that the Fed's wording is more hawkish, sparking concerns in the market about the faster pace of Taper, increased frequency of rate hikes, and earlier timing of rate hikes.
From some indicators, the market has experienced an oversold situation in the short term, and the probability of Bitcoin fluctuating in current prices is relatively high. However, if the inflation data in the United States continues to exceed expectations this year, triggering the Federal Reserve to further accelerate the pace of tightening, there is still a high probability that digital currencies will weaken further in the future, "said Da Hongfei.
Regarding the later trend, Pan and Lin also pointed out that Bitcoin is a highly volatile speculative asset. Once it enters a decline, the reverse trend and negative feedback will strengthen, and its drawbacks as a trading currency will gradually become apparent. Therefore, he judged that Bitcoin may continue its decline.
This article originates from the International Financial Journal
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