Bitcoin's sharp fall caused 43 institutions to lose tens of billions of dollars Tesla, Meitu and other speculators suffered losses

Financial Associated Press | Blockchain Daily on May 10 (reporter Xu Zhihao Dong Yujia), around 8:00 a.m. Beijing time on May 10, bitcoin fell below the $30,000 mark, the lowest to $29,735, a drop of more than 10% in 24 hours.

That's down more than 56 percent from the all-time high of $69,000 set last November. It is worth noting that the last time Bitcoin fell below $30,000, it was back in July 2021.

Driven by the fall in Bitcoin, other cryptocurrencies have almost all-fold declined, with Ethereum falling to $2200 at one point. According to CoinMarketCap data, the global cryptocurrency market has traded $143.09 billion in the last 24 hours, and the total market capitalization has fallen 9.2% to $1.498 trillion.

Some industry insiders have analyzed that the recovery of cryptocurrencies will not occur in the next two months, and there will be more losses in the crypto market. But once the stock market finds a "some sort of bottom," Bitcoin will start to bounce back as it has in previous years.

In 24 hours, more than 270,000 people blew up nearly $1 billion

According to the third-party data service provider bcoin, as of 12:00 on May 10, 271,300 people around the world have blown up $970 million in the past 24 hours, of which $262 million is open for Bitcoin and $220 million for Ethereum.

What is the direct trigger for the bitcoin price to fall below $30,000?

Some analysts believe that at about 2 a.m. today, the Bitcoin address of Luna Foundation Guard (LFG) transferred 42530.82 bitcoins, worth about $1.319 billion. This has stimulated a panicked sell-off among a large number of users.

Analysts at glassnode, an on-chain data analytics firm, said there have been "urgent deals" in the recent sell-off, with investors even paying higher fees for a quick sell-off. Last week, all on-chain commissions totaled 3.07 bitcoins, the largest amount ever recorded.

Zhao Wei, a senior researcher at Ouyi Research Institute, told the Blockchain Daily reporter that from Bitcoin hitting a new high of $69,000 to falling below the 50,000-dollar and $40,000 marks consecutively, it is closely related to the Federal Reserve's monetary tightening policy.

On May 4, the U.S. Federal Reserve announced a 50 basis point rate hike, raising the target range for the federal funds rate to between 0.75% and 1%. Meanwhile, the Fed announced it would cut its balance sheet by nearly $9 trillion from June 1 to match rate hikes and curb soaring inflation.

As soon as the news came out, the US stock market and the crypto market rose slightly in a short period of time, because the panic had been largely digested in the early stages. During the meeting, Fed Chairman Jerome Powell ruled out a 75 basis point hike, dispelling market doubts about too aggressive rate hikes.

But it was followed by a sharp turn in the market, with both the U.S. stock market and the crypto market closing sharply lower.

Zhao Wei analyzed that the Fed's interest rate hike this time is the first time since 2000 that the interest rate hike has reached 50 basis points, showing the urgency of the Fed to tighten monetary policy, which has brought a shock to the capital side and market sentiment.

A number of coin trading companies lost money

According to the data of The Sky Eye on the chain under Ouke Cloud Chain, as of now, a total of 43 companies or institutions, including Grayscale Investment, hold 1.2256 million bitcoins.

After experiencing a sharp fall in the morning, Bitcoin experienced a small rebound. At about 13:00 on May 10, the price of Bitcoin returned to $30,000, tentatively quoted at $30,878. However, the cumulative decline of tens of thousands of dollars since the Federal Reserve announced the interest rate hike on May 4 also means that the bitcoin held by these institutions and companies has evaporated by more than $12 billion.

Bitcoin's current round of decline has fallen below the bitcoin cost price of many institutions or companies. According to public information, at the price of $30,800 in bitcoin, 12 institutions or companies, including Tesla, are currently holding bitcoins at a loss.

Among them, AKer ASA lost $21.62 million, Meitu lost $19.75 million, and Plunwra lost $16.95 million, ranking in the top three. In addition, Tesla holds 40,900 bitcoins, with an average holding price of $32,000.

The plunge in cryptocurrencies has also affected stocks related to the sector, with the company buying about 4,167 bitcoins for $190.5 million in cash between February 15 and April 2022, according to data submitted by MicroStrategy to the SEC, and the company that holds the company as of now holds about 129218 bitcoins for a total purchase price of about $3.97 billion. On average, it costs about $30,700 per bitcoin.

Due to the decline in the price of bitcoin, it once fell below the microstrategy cost price of $30,700 per coin, and the company's holdings also suffered a loss. At the same time, MicroStrategy stock also fell 25.55% at the close of trading at $219.05 in the early morning of today (May 10, Beijing time).

Other cryptocurrency concept stocks have similarly plummeted recently. At the close of trading on May 10, Beijing time, Canaan Technology's stock price plummeted 25.37% to close at $3.06, a decline of more than 40% this year. Coinbase shares tumbled 19.5 percent on the day to close at $83.51, a record low that has fallen more than 65 percent this year. Robinhood's stock price is down more than 45% in 2022.

Galaxy Digital CEO Mike Novogratz predicted on a recent earnings call that the cryptocurrency recovery will not happen in the next two months, and that the crypto market will have more losses.

But he said he was still "very confident" in the market that once the stock market found "some kind of bottom," Bitcoin would rebound.

Notably, Galaxy Digital reported a loss of $111.7 million in the first quarter due to the fall in cryptocurrency prices.

In an interview with the media, Cathie Wood, founder of ARK Invest, said that the growing correlation between cryptocurrencies and traditional assets indicates that the bear market will soon be over.

She further analyzed that cryptocurrencies, as a new asset class, should not look like NASDAQ, but they are now highly correlated. "You know you're in a bear market, and maybe it's coming to an end when everything starts to look similar."

She said that despite the current market downturn, she remains confident in cryptocurrencies for a long time, as with ARK's other investment categories, she believes that cryptocurrencies will grow exponentially with economic and social development.