In recent days, crypto assets have continued to dive, and the bull market is faltering. For investors, the most concerned question at the moment is “Are the cattle still there?”
According to the contract emperor’s data, on April 18, Bitcoin plummeted by more than 10,000 US dollars, the total contract liquidation amount of the entire network exceeded 6.9 billion US dollars, and there were as many as 500,000 liquidation accounts; on April 23, Bitcoin reappeared its plummet pattern. The contract liquidation amount of the entire network exceeded US$3.1 billion.
The sharp drop in the past two days has really made the currency circle sad, and many investors have suffered heavy losses.
In contrast, the continuous waterfall market that appeared on March 12 and 13 last year had liquidated positions of US$2.3 billion and US$2.2 billion respectively. From the point of view of the liquidation amount in the above two days of this year, this seems to be a small scene.
Some people believe that the Coinbase listing event overdrafted the market’s bullish sentiment, and a callback is inevitable after a crowd of altcoins danced around. Others believe that after the currency price has reached a high level, the market is extremely sensitive to any information, especially the U.S. policy attitude. Great influence on Bitcoin.
More importantly, this wave of Bitcoin’s drop from $64,800 has made the entire currency circle panic, and the bull market has suddenly become confusing.
The crypto market plummeted
Since Bitcoin broke through the high point of the previous round of bull market, every wave of ups and downs has made the currency circle crazy. The difference is that the market has suddenly fallen in recent days, catching investors who are immersed in skyrocketing expectations.
Market analysts believe that, first of all, Bitcoin’s rise in each wave and the time it takes to rise are gradually shrinking; second, the enthusiasm of institutional investors to buy and the large sell-off after Coinbase’s listing have greatly increased market risks.
On April 18, the contract liquidation amount of the entire network refreshed the largest liquidation amount in a single day in history, becoming a major event in the crypto market.
Analyst Tina said that in the successive surges of Bitcoin and Ethereum, investors have become “greedy” and are too optimistic in the short term. Therefore, they have insufficient understanding of the market risks that have turned sharply.
According to the Shanghai Securities News, excessive market leverage is the main reason for the violent fluctuations in the cryptocurrency market. In addition, the uncertainty of national regulatory policies also brings risks to the crypto market.
Kevin, a market researcher at the BMEX Contract Research Institute, said that there were three main reasons for the sharp drop in Bitcoin on April 18: First, a major safety accident occurred in a coal mine in Xinjiang Changji Hui Autonomous Prefecture on April 10. After the accident, local cryptocurrency mines in Xinjiang had to perform large-scale power outages to cooperate with security investigations. Second, the U.S. Treasury Department is planning to crack down on financial institutions that use digital assets to launder money, and at the same time, Boao “Digital Payment and Digital Currency” Asia Forum in 2021 It mentioned that cryptocurrencies need stronger regulatory rules; third, on the first day of listing on Coinbase, its CEO Brian Armstrong sold $291.8 million in stock. The company’s CFO sold shares worth more than $99 million.
On the day of April 23, Bitcoin began to fall in the early hours of the morning and continued to converge until 16:00. Many analysts said that investor sentiment in the currency circle has reached a very pessimistic level.
“Bitcoin’s diving again may be related to the US tax increase plan.” In Tina’s view, US investors are facing the risk of capital gains tax due to the impact of US President Biden’s plan to nearly double the capital gains tax on the wealthy.
On April 21, Gemini officially tweeted that according to its report, 14% of Americans are crypto investors. This means that 21.2 million American adults own crypto assets, and other studies estimate that this number is even higher.
At the same time, a large number of major spot market prices appeared on Coinbase. According to AICoin’s main large order tracking, it also shows that from 5 to 17:00 on April 21, Coinbase frequently appeared a large number of large-scale market sell orders, a total of 347, a total of 5353 BTC, with an average selling price of 51980 US dollars; the concentrated transaction period was Around 10:00 on April 22 and around 2:00 on April 23.
Sino-U.S. release of policy “inflection point” signal
“This round of Bitcoin boom stems from global inflation expectations.” Sun Lijian, director of the Financial Research Center of Fudan University, said that on the whole, central banks have increased the supervision of Bitcoin and behind the recent “roller coaster” market of Bitcoin, there are three problems that need to be solved. Attention.
He believes that first, central banks of various countries have announced to strengthen the management of encrypted digital assets such as Bitcoin, and it is also because the market’s pursuit of Bitcoin has to some extent swallowed the effectiveness of national monetary policies in supporting the real economy; second, The U.S. Department of the Treasury released the news that it will crack down on financial institutions’ use of cryptocurrency to launder money, or it is out of consideration to consolidate the international status of the U.S. dollar; third, one of the fundamental reasons for the volatility of the Bitcoin market is that some speculators “short for the sake of long” “The demand.
It is undeniable that Bitcoin regulatory policy is an important factor affecting its pace.
From the perspective of the United States, efforts are being made to levy taxes and fees on users of encrypted assets. On April 21, U.S. Senator Rob Portman of Ohio wanted to clarify the crypto asset tax policy in the proposed bill. In an interview, Portman said that he hopes to propose a bipartisan-supported bill after the next Congress adjourns to solve the problem of non-taxation of many crypto-asset users in the United States. Portman said that lawmakers “have no final bill yet” and “still collecting information on this issue.” However, he claimed that both parties are interested in closing the cryptocurrency taxation gap.
It is worth mentioning that on April 25, according to media reports, Cardano founder Charles Hoskinso warned that US investors are facing capital gains tax, saying that the Biden administration’s plan to increase capital gains tax may not bode well for the crypto asset market. .
Hoskinso pointed out that if the current government decides to impose additional taxes on capital gains, the crypto asset market may collapse. In addition, Hoskinso also revealed that he personally will be affected by the proposed tax increase. Earlier news, Biden announced plans to levy a capital gains tax of up to 43.4% on the wealthy.
At the same time, the country has also released the latest developments in the supervision of Bitcoin and stablecoins.
According to a Xinhua News Agency report on April 18, Li Bo, deputy governor of the People’s Bank of China, said at the Boao Forum for Asia sub-forum that the People’s Bank of China is studying the regulatory rules for Bitcoin and stablecoins. In the future, if any stable currency wants to become a widely used payment tool, it must accept the same strict supervision of financial institutions such as banks or quasi-banks.
On the same day, he stated in a video speech titled “Digital Payment and Digital Currency” that it is necessary to ensure that speculation in encrypted assets does not cause serious financial risks. Crypto assets are an investment option. It is not a currency itself, but an alternative investment. , If cryptocurrency assets play a role, they will be used as an investment tool or alternative investment. If it is used as an investment tool, many countries, including China, are studying their regulatory environment.
“Ice and Fire” in the future
After continuous sharp declines, there are currently two distinct voices in the market: one that is bullish and the other is bearish.
The Nuclear Finance APP noticed that there is a huge gap in the views of analysts regarding the next market trend, and both long and short sides hold their own opinions and do not give in to each other.
Tina believes that the bull market is not over yet, and this kind of large-scale correction is suppressing profit, so as to reserve potential energy for better upside. However, analyst Jason disagrees. He said that from a morphological point of view, the Bitcoin trend has turned from bullish to bearish, and there is currently no major bottom, and it is necessary to prepare for the early end of the bull market.
This is true within the currency circle, and the same is true outside the currency circle.
On April 20, Bloomberg released a new report showing that due to the continued effects of deflation, the decline in commodity prices and U.S. Treasury yields may continue. The prospect of deflation may hit some crypto-asset investors who see Bitcoin as a hedge against inflation and currency devaluation.
In addition, Liu Shengjun, president of the National Institute of Financial Reform, pointed out in an event that Bitcoin is a utopia and has now entered the final stage of the bubble of “self-entertainment”.
And Bill Miller, the founder of hedge fund Miller Value Partners, said in an interview that although Bitcoin has recently approached the level of 65,000 US dollars, he believes that Bitcoin is not in a bubble. Now this is the beginning of the mainstreaming of Bitcoin. Due to changes in supply and demand, he expects more room for upside. Miller pointed out that Bitcoin’s retracement is normal because volatility is the price investors must pay for the outstanding performance of the cryptocurrency.
According to TheDailyHodl news, U.S. Senate of Wyoming and Bitcoin advocate Cynthia Lummis stated that Bitcoin is a reliable store of value and has attracted the attention of mainstream investors. In an interview, he cited the listing of Coinbase and Tesla’s $1.5 billion investment in Bitcoin, proving that Bitcoin is being widely adopted.
At the same time, Michael Morrell, the former director of the US Central Intelligence Agency, believes that the limited use of Bitcoin in illegal activities is decreasing. He said that there is more and more evidence that illegal users are switching from Bitcoin to encrypted assets with stronger anonymity. Bitcoin’s public availability and verifiability make it unsuitable for criminal activities.
On April 24, the Louisiana House of Representatives passed a bill praising Bitcoin and its anonymous creator Satoshi Nakamoto for “contributing to economic security”. The bill stated that Bitcoin may replace gold as a new reserve asset. The bill also mentioned that Bitcoin is the first decentralized trillion-dollar asset that protects people from the devaluation of global currencies. The state lawmakers encouraged state and local governments to consider how to benefit from this new technology.
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.