Bitcoin, the most valuable cryptocurrency in the global market today, was created in 2009 by Satoshi Nakamoto to invent and officially launch the Bitcoin financial system.
Bitcoin is something entirely new. Bitcoin, like the Internet, has a whole new underlying technology, operating principles and upper-level applications, and there has never been anything similar in history.
On February 8, Tesla announced an investment of $1.5 billion in Bitcoin, which has two effects on the Bitcoin market:
First impact:
Popularized the payment market, evolving "Bitcoin can buy pizza" to "Bitcoin can buy Tesla". It is conceivable that in the future, the payment market of Bitcoin may become more and more extensive, and it may be possible to buy mobile phones, refrigerators, etc., which is the biggest progress of Bitcoin and also strengthens the actual payment value of Bitcoin as an electronic currency.
Second effect:
Tesla's investment in Bitcoin has a demonstration effect, will guide other companies to invest in Bitcoin, Bitcoin as a future asset has been used as a company reserve, the future world assets must be digital, and the digital assets in the future world must be decentralized. First of all, now the decentralized assets are more mature, and it is fairer to reach a consensus, that is, Bitcoin.
Bitcoin has fallen sharply again, and there have been two plunges of more than 80% in history Will history repeat itself?
Affected by the geopolitical tensions in Ukraine, the price of bitcoin has been falling since The withdrawal of Russia announced on February 16, but in the long run, whether the event tends to be resolved satisfactorily or the conflict escalates, bitcoin has the potential to "recover the lost ground". In the future, if there is a local war, Bitcoin does not rule out a short-term upward trend.
However, in January, when cryptocurrencies plummeted, trading volumes also shrank sharply. According to CryptoCompare's report, total spot trading volume fell to $1.8 trillion in January, down more than 30% month-on-month. This is the lowest volume since the end of 2020.
Ed Hindi, chief investor and co-founder of Tyr Capital, said: "This is a very light, scary and uncertain time for cryptocurrencies. As people say, smart money doesn't sleep or take vacations. But retail investors in the cryptocurrency market do take a break, especially when they get hurt. ”
Last year, the boom in cryptocurrencies produced a very positive money-making effect, with a surge in jobs at startups and other eager companies, and an influx of many venture capital.
Hany Rashwan, co-founder and CEO of 21Shares, said in an interview with the media that with many cryptocurrencies falling by 50% or more in just a few months, companies in the industry have become much more cautious in implementing expansion plans; 21Shares offers exchange-traded products that invest in cryptocurrencies, managing about $2.5 billion in assets.
"We expect wide volatility in 2022, limited to year-to-date intraday levels, and if the Fed continues to normalize policy in a 'standard' 2-year tightening cycle, the downside risk to Bitcoin will be greater by 2023." Stifel Investment Advisors analyst Barry Bannister said.
He also pointed out that Bitcoin still has a lot of room to fall and is currently facing three major macro disadvantages that affect its price. Including the global money supply, the 10-year U.S. Treasury yield and the stock risk premium for the S&P 500, the Fed plans to tighten monetary policy in the form of interest rate hikes and balance sheet cuts.
The Bitcoin bull market is closely related to a process called halving, which occurs every few years. Du Jun, co-founder of Huobi, said in an interview with the media that if there are any signs of past price cycles, Bitcoin may not have another bull market until the end of 2024 or early 2025.
The halving is written into Bitcoin's underlying code and halves the rewards that so-called miners receive for verifying exchanges on the cryptocurrency network. It occurs approximately every four years.
The last halving occurred in May 2020, and in 2021, Bitcoin broke through an all-time high above $69,000. A similar situation occurred at the time of the 2016 halving. The following year, Bitcoin reached an all-time high of around $19,000 at the time.
How much is it possible for Bitcoin to fall again? Bitcoin's price first peaked on November 29, 2013, hitting $1137, and just a year later, on January 14, 2015, it fell 84% to $183.
The pattern was repeated four years later: peaking at $19,041 on December 17, 2017, and seeing a bottom at $3,204 a year later, a cumulative decline of 83 percent.
If this historical pattern is accurately reproduced, then the bitcoin price, which reached an all-time high of 69040 in November 2021, will fall to a low of $11,515 in November this year, down 83% from the peak in November last year.
Disclaimer: Trading in digital assets involves significant risks and this information should not be used as a basis for investment decisions or should not be construed as a recommendation to engage in investment transactions. Please ensure that you fully understand the risks involved and invest with caution. This article is only for information reference, does not constitute any investment advice, all the user's investment behavior has nothing to do with this article.
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