Bitcoin Suffers Another Major Plunge, Over 148,000 Liquidated: Halving Effect Continues to Ferment, Market Risks Intensify

Bitcoin Suffers Another Major Plunge, Over 148,000 Liquidated: Halving Effect Continues to Ferment, Market Risks IntensifyOn October 26th, Bitcoin prices saw another significant drop, falling nearly 4% at one point. According to data from Coinglass, the virtual currency market experienced a collective decline, with Ethereum falling over 3

Bitcoin Suffers Another Major Plunge, Over 148,000 Liquidated: Halving Effect Continues to Ferment, Market Risks Intensify

On October 26th, Bitcoin prices saw another significant drop, falling nearly 4% at one point. According to data from Coinglass, the virtual currency market experienced a collective decline, with Ethereum falling over 3.83% and Dogecoin plummeting by 7.85%. In the past 24 hours, over 148,000 investors were liquidated, resulting in losses exceeding $408 million.

Meanwhile, CME Bitcoin futures closed 2.30% lower than the previous day's New York close, accumulating a 3.09% decline for the week. Cryptocurrency-related stocks also witnessed a collective downturn, with MARA Holdings falling as much as 7% and Riot Platforms dropping over 5%.

This recent plunge in Bitcoin prices is closely linked to a series of events and trends. One significant factor is the evolving regulatory stance and policy changes of governments towards cryptocurrencies. Earlier, the OEXN platform publicly expressed that Bitcoin's impact on government fiscal policy is intensifying, advocating for the consideration of taxation or banning BTC usage.

Furthermore, the persistent rise in Bitcoin mining difficulty is putting pressure on miners' earnings. According to data from blockchain explorer Mempool, Bitcoin mining difficulty has surged by 3.94%, reaching a historical high of 95.67T, with the adjustment occurring at block height 866880. TheBlock's data dashboard reveals that the seven-day moving average of Bitcoin's total network hashrate also hit a new record, exceeding 700 EH/s for the first time.

More importantly, the Bitcoin halving effect continues to ferment. Since the Bitcoin halving in April, miners' earnings have experienced a significant decline. Due to the halving of block rewards, Bitcoin's daily output has been reduced to half of its pre-halving level. While Bitcoin prices remain relatively stable compared to the pre-halving period, miners' profits have shrunk considerably. Calculations suggest that if miners sell Bitcoin at $60,000 per coin, the entire mining industry would lose nearly $10 billion in earnings within a year following the halving.

Besides the aforementioned factors, shifts in the global macroeconomic environment, including interest rate changes, inflation rates, and international trade relations, can also influence the value of Bitcoin and other cryptocurrencies. Additionally, the current vulnerability of cryptocurrency trading platforms and wallets to hacking attacks and security breaches remains a risk factor for investors to be aware of.

In conclusion, Bitcoin price fluctuations are influenced by numerous factors, and the multiple risks facing the market cannot be disregarded. When engaging in cryptocurrency investments, investors need to maintain rational judgment, fully understand market risks, and implement risk control measures.

Multiple Factors Behind Bitcoin Price Volatility

Volatility in Bitcoin prices has consistently been a focal point of market attention, driven by a complex interplay of factors. The key elements contributing to Bitcoin price fluctuations are analyzed from various perspectives below:

1. Market Sentiment and Speculative Behavior

The cryptocurrency market is highly speculative, with market sentiment and investor behavior playing a crucial role in price volatility. When market sentiment is positive and investor confidence is high, Bitcoin prices typically rise. Conversely, when market sentiment turns negative, and investor fear spreads, Bitcoin prices tend to fall.

2. Macroeconomic Environment

Changes in the global macroeconomic environment also impact Bitcoin prices. For instance, when interest rates rise and inflation increases, investors may shift funds from risky assets to less risky ones, leading to a decline in Bitcoin prices. Additionally, changes in international trade relations, such as trade wars, can affect market sentiment and, in turn, impact Bitcoin prices.

3. Technological Innovation and Application Development

Bitcoin's technological advancements and expansion in application scenarios also have a significant effect on its price. For example, the broadening adoption of blockchain technology and the increasing use cases for Bitcoin can provide more value support for Bitcoin, pushing its price upwards.

4. Regulatory Policies

Government regulations on cryptocurrencies are a vital factor influencing Bitcoin prices. If governments adopt a supportive stance towards cryptocurrencies and establish clearer regulatory frameworks, it will contribute to the development of the Bitcoin market, potentially driving prices higher. Conversely, if governments implement stricter regulatory measures, such as banning trading or imposing taxes, it would hinder Bitcoin market growth, leading to price declines.

5. Mining Difficulty and Cost

Bitcoin's mining difficulty and cost also affect its price. When mining difficulty increases and costs rise, miners' profitability decreases, which may lead to a drop in Bitcoin prices. Conversely, if mining difficulty decreases and costs lower, it could potentially drive Bitcoin prices upwards.

6. Security Breaches and Hacking Attacks

Security vulnerabilities and hacking attacks on cryptocurrency trading platforms and wallets also impact prices significantly. If large-scale security breaches or hacking events occur, it could trigger market panic, resulting in sharp declines in Bitcoin prices.

7. Bitcoin Halving

Bitcoin halving refers to the event where Bitcoin mining rewards are halved. Bitcoin halving reduces the supply of new Bitcoins, leading to a shift in supply and demand dynamics, which can impact Bitcoin prices.

Multiple Risks Facing Bitcoin

Beyond price volatility, Bitcoin faces several risks that could potentially impact investors' returns, necessitating cautious awareness:

1. Regulatory Risk

Government regulations on cryptocurrencies are subject to significant uncertainty, and any new regulatory measures could have a major impact on Bitcoin prices. For example, some countries may impose taxes on cryptocurrency transactions or even ban them altogether.

2. Technological Risk

Bitcoin technology itself carries inherent risks. For instance, blockchain technology may contain security vulnerabilities, and the Bitcoin network could experience malfunctions, all of which could contribute to Bitcoin price drops.

3. Market Risk

The cryptocurrency market is an emerging market with significant market risks. For instance, market sentiment is highly volatile, price fluctuations are dramatic, and investment risk is high.

4. Legal Risk

Bitcoin is a decentralized digital currency, and its legal status and regulatory framework are still underdeveloped. In some countries, Bitcoin may be deemed illegal or unregulated.

5. Security Risk

Cryptocurrency trading platforms and wallets have consistently been targets of hacking attacks, requiring investors to carefully select secure trading platforms and wallets and implement robust risk management measures.

Summary

As an emerging digital asset, Bitcoin's price volatility is influenced by various factors, and the multiple risks facing the market cannot be ignored. Investors engaging in cryptocurrency investments need to maintain rational judgment, fully understand market risks, and implement risk control measures.

Disclaimer: The content and data presented in this document are for informational purposes only and do not constitute investment advice. Please verify before use. Use at your own risk.