On the morning of June 14th, Bitcoin fell short of the $22000 mark in intraday trading, with a quote of $21904 per coin as of 11:34, which is already the lowest level since the end of 2020.Pan Helin, co director and researcher of the Research Center for Digital Economy and Financial innovation of the International Joint Business School of Zhejiang University, told the reporter of Shell Finance that this round of sharp drop in Bitcoin is because the virtual currency itself is a risky asset
On the morning of June 14th, Bitcoin fell short of the $22000 mark in intraday trading, with a quote of $21904 per coin as of 11:34, which is already the lowest level since the end of 2020.
Pan Helin, co director and researcher of the Research Center for Digital Economy and Financial innovation of the International Joint Business School of Zhejiang University, told the reporter of Shell Finance that this round of sharp drop in Bitcoin is because the virtual currency itself is a risky asset. In the context of the Federal Reserve's interest rate increase, the appreciation of the US dollar has increased the pressure on the depreciation of risky assets.
The sharp decline of Bitcoin once again indicates that related fields are full of risks. Since last year, the Chinese government has issued multiple articles to remind consumers to prevent the risk of virtual currency trading speculation. Last July, the Business Management Department of the People's Bank of China issued a notice stating that consumers should enhance their risk awareness, not participate in virtual currency trading and speculation activities, not blindly follow virtual currency related speculative activities, and be cautious of personal property and rights damage.
High inflation combined with interest rate hikes expected Bitcoin prices to fall below $22000
On June 10th local time, the US Department of Labor released data showing that the US Consumer Price Index (CPI) rose by 1.0% month on month and 8.6% year-on-year in May, setting a new 40 year high. This is even higher than the 8.5% increase in March and the 8.3% increase in April.
The unexpected inflation data may change the Federal Reserve's "established" interest rate hike strategy. According to media reports, Federal Reserve officials are considering a 75 basis point hike this week, and international banks such as JPMorgan Chase and Barclays Bank have also revised their views, predicting that the Federal Reserve will raise interest rates by 75 basis points this week.
Under the expectations of high inflation in the United States and interest rate hikes by the Federal Reserve, virtual currencies such as Bitcoin and Ethereum have fallen sharply. According to the MyToken platform, Bitcoin fell 1.2% today. As of the morning of the 14th, the price of Bitcoin briefly fell below the $22000 mark, with a quote of $21904 per coin as of 11:34, which is already the lowest level since the end of 2020.
Ethereum fell more than 3% today, with a price below $1200 per piece. As of 11:38 am today, the price reached 1158.53 yuan per piece, setting a new low since the beginning of 2021.
Investors such as Tesla suffer losses, experts say Bitcoin will enter a long-term downward channel
In fact, since the high point of over 60000 US dollars in November 2021, Bitcoin prices have entered a downward channel. According to MyToken platform data, Bitcoin prices have plummeted by 53.08% in the past six months, and Ethereum prices have also shown a similar trend, with a drop of as much as 70.24% in the past six months.
The continuous decline of virtual currencies has hurt many investors' hearts. According to Bitcoin data, as of 23:00 Beijing time on June 13, over 217000 people have sold out Bitcoin transactions in the past 24 hours, with a total amount of 955 million US dollars (approximately 6.449 billion yuan).
Michael Saylor, founder and CEO of MicroStrategy (MSTR. US), made a significant bet on Bitcoin with serious consequences, resulting in a book loss of approximately $1 billion on the company's holdings of Bitcoin.
In addition, the continuous downturn in virtual currency prices has also led to significant losses for Tesla in related investments. According to Tesla's 10-K file submitted to the SEC, in the year ended December 31, 2021, due to changes in the company's Bitcoin book value, an impairment loss of approximately $101 million was provisioned. As of December 31, 2021, the fair market value of such digital assets held by the company was $1.99 billion.
Pan Helin told reporters that in the future, Bitcoin will enter a long-term downward channel, which does not exclude that it will eventually become a foam asset, or even a high-risk asset after the foam bursts. Bitcoin has created a price myth, but its fundamental demand is to become a world currency. If it does not have circulation and savings functions, but only serves as a highly volatile asset, it indicates that faith itself has problems.
The sharp drop in virtual currency in this round once again indicates that related fields are full of risks. Since last year, the Chinese government has issued multiple notices to remind consumers to prevent the risk of virtual currency trading speculation. Pan Helin stated that it is very important for the state to have a clear regulatory attitude, to control financial institutions, prevent them from participating in virtual currency speculation, and not provide payment channels. However, personal virtual currency transactions are still difficult to regulate, and the law should clarify that trading behavior in the secondary market is not protected, and the regulatory attitude should be clearly stated.
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