In the past day, Bitcoin was on a “roller coaster”. First, it soared all the way to a record high of $58,332 in the early hours of Monday morning, and then fell suddenly, with the lowest daily drop of $10,000 to $47,780. As of press time, the price of Bitcoin has gradually risen above $54,000.
The plunge in the price of Bitcoin caused leveraged traders to blow up their positions on a large scale. According to data from Bitcoin Homes, within 24 hours, a total of 369,000 virtual currencies on the entire network have been liquidated, and liquidation funds reached 24.5 billion yuan (3.793 billion US dollars).
The US stock market was mixed on Monday. The Dow rose slightly by 0.09%, and the S&P 500 index fell for five consecutive days, setting a record for the longest consecutive decline in nearly a year. The Nasdaq fell more than 2% due to the collective decline of technology leaders.
Bitcoin plunges by $10,000 in intraday trading
In the early hours of Monday morning, the price of Bitcoin set a new historical record and exceeded US$58,000 for the first time, reaching a maximum of US$58,332, or about 377,000 yuan. This is also the first time in history that the price of 1 Bitcoin has exceeded the price of 1 kg of gold (373,000 RMB).
10 minutes before the opening of US stocks on Monday, mainstream encrypted digital currencies accelerated their dive. Bitcoin fell more than US$3,000 within 5 minutes, fell below the US$50,000 mark and quickly fell below US$48,000, and the decline expanded to more than 17% within 24 hours. Ethereum’s intraday decline expanded to 20%.
Earlier, U.S. Treasury Secretary Yellen stated that Bitcoin is often used for illegal financing and its application efficiency is low. Bitcoin is highly speculative and investors should be careful. Digital currency may lead to faster and lower-cost payments, but many issues need to be studied, including consumer protection and money laundering.
In addition, European Central Bank President Lagarde is also critical of Bitcoin. On February 10, she stated that she did not believe that Bitcoin is a real currency, and central banks will not soon hold it as a reserve currency. Lagarde also called for more regulation of cryptocurrencies in January, stating that Bitcoin has been used in some “interesting businesses”, including money laundering.
However, Bitcoin quickly rebounded after the sharp drop. Data from the mainstream trading platform Coindesk showed that its price had risen to above US$54,000 as of press time, a sharp rebound from an earlier low of about US$6,000.
Bitcoin has risen rapidly this year. In the past six months, the price of Bitcoin has risen by approximately 350%. The market value of Bitcoin surpassed US$1 trillion last Friday, marking an important milestone in the price breakthrough of the world’s most popular cryptocurrency.
Tesla disclosed documents on February 8th that the company has purchased $1.5 billion in Bitcoin. The average price of buying bitcoin in January was about 34,000 US dollars. The current price of bitcoin has soared to 57,000 US dollars, an increase of 67%. This means that if Tesla holds the same number of bitcoins, then 1.5 billion bitcoins will be invested. The US dollar has risen to US$2.505 billion, with a floating profit of approximately US$1.005 billion, or approximately RMB 6.4 billion. Tesla, which has only entered the market for one month, has invested in Bitcoin that is 39% higher than the net profit of nearly 500,000 electric vehicles sold in 2020.
However, the skyrocketing Bitcoin has also made Tesla CEO Musk start to doubt. On Saturday local time, Musk tweeted, “Bitcoin and Ethereum (the prices) do seem to be a bit high.”
Musk’s statement may also be one of the incentives for Bitcoin’s plunge.
Technology leader generally fell, dragging the Nasdaq down by more than 300 points
The three major U.S. stock indexes suffered a wave of declines late on Monday. The Dow almost gave up all gains and the Nasdaq’s decline expanded to nearly 2.5%. In the end, the three major stock indexes only rose slightly, the S&P and Nasdaq closed down, and the S&P fell for five consecutive days.
The Dow closed up 27.37 points, or 0.09%, to 31521.69 points. The Nasdaq closed down 2.46% to 13,533.05 points, a record low since February 1, and the biggest drop since October 28 last year. The S&P 500 closed down 0.77% to 3,876.50 points, a record low since February 4, and the largest closing decline since January 29.
The U.S. stock market has intensified divergence. After the outbreak of the epidemic last year, technology stocks that rose sharply fell, and cyclical stocks such as energy and finance rose. Among technology stocks, Apple fell 2.98%, Microsoft and Amazon fell more than 2%, Google parent companies Alphabet and Netflix fell more than 1%, and Facebook fell nearly 0.6%. US stocks of new energy auto stocks collectively fell, Tesla fell 8.55%, and the total market value fell below 700 billion US dollars. Weilai Automobile fell more than 7.9%, Xiaopeng Automobile fell 7.05%, and Ideal Automobile fell 6.70%. Chip stocks fell collectively, with Micron Technology falling more than 5%, AMD falling more than 4%, and Qualcomm falling more than 3%.
Contrary to the weight of technology is the collective rise of pro-cyclical sectors such as financial, crude oil, aviation, and cruise ships. Among them, JPMorgan Chase rose 0.94%, Morgan Stanley rose 1.84%, Chevron rose 2.70%, Exxon Mobil rose 3.69%, American Airlines rose 9.42%, Delta Air Lines rose 4.53%, Royal Caribbean Cruises rose 9.33%, Boeing fell 2.11% due to the explosion of the 777 passenger jet engine.
Wang Jianlin’s AMC theaters rose 14.91%. On February 22, local time, New York State Governor Cuomo announced that all movie theaters in New York City will reopen on March 5 at the earliest. This is the first time that New York City has determined the exact time for the planned restart of movie theaters since the outbreak of the new crown pneumonia. In order to prevent the epidemic, all movie theaters in New York City will be the same as other open theaters in New York State, allowing only 25% attendance. In addition, the large-scale projection hall of the cinema must not exceed 50 spectators per show.
Most popular Chinese concept stocks also fell. As of the close, Alibaba fell 3.64%, Tencent ADR fell 5.46%, Baidu fell 1.21%, JD fell 7.95%, Pinduoduo fell 3.95%, NetEase fell 5.19%, Futu Holdings fell 8%, Canaan Technology fell 15.89%.
The 10-year U.S. Treasury bond yield rose to 1.374% from 1.344% last Friday. It has risen for three consecutive weeks, with the largest increase since early January last week. Rising bond yields are worrying investors, and some stocks are beginning to look less attractive than assets deemed risk-free. At the same time, fund managers have been withdrawing from highly valued technology stocks that led the market last year. As the outlook improved, they invested money in economically sensitive sectors, leading to rises in financial and energy stocks.
There is another news after the US stock market. On February 22, local time, the House Budget Committee voted 19 votes in favor and 16 against, and decided to advance the US President Biden’s $1.9 trillion bailout bill, which will be submitted later this week. The House of Representatives voted. The bill will be discussed in the Senate later and is expected to face greater partisan challenges and more cumbersome procedures.
In the UK, Prime Minister Boris Johnson began to speak at the Lower House of Parliament at 17:36 pm local time on the 22nd (23:36 Beijing time), and announced the roadmap plan for the removal of strict control measures in England. According to this roadmap, the removal of strict control measures in the UK will be carried out in four stages. According to the roadmap announced by Johnson, the interval between every two phases of control removal should be at least 5 weeks, and all social restrictions are expected to end on June 21.
The collective rebound of stock indexes in major European countries lasted only one day last Friday, and the decline resumed on Monday. German, British, Italian, and French stocks gave up some of last Friday’s gains, while the UK evened out last Friday’s gains. The German DAX 30 index closed down 0.31%, the French CAC 40 index closed down 0.11%, and the UK FTSE 100 index closed down 0.18%.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.