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Since entering April, the Bitcoin market can be described as "falling repeatedly", falling below $65,000 on April 2, and on April 14, Beijing time, Bitcoin suffered a "flash crash", once falling below the $60,000 / integer mark, down more than 7% in 24 hours. On April 19, Bitcoin once again repeated the "historical tragedy" and crashed again, with Bitcoin once "diving" more than $3,870 and once falling below the $60,000 / integer mark, with a maximum decline of 6.1%. As of press time, Bitcoin is tentatively trading at $62,301 per coin, down 1.84% during the day.
Affected by the sharp fall of Bitcoin, CoinGlass data shows that in the past 24 hours, more than 70,000 people in the virtual currency market have liquidated, with a total amount of 208 million US dollars (about 1.506 billion yuan).
According to industry insiders, Bitcoin's recent downturn is mainly due to the intensification of geopolitical uncertainty and the spread of risk aversion in the market to virtual currency assets. In addition, high expectations and speculation in the event of a "Bitcoin halving" may push the price higher before the halving, and once these expectations are not met, a large number of investors may be inclined to take profits, causing the price to plummet.
Looking back at the development of the cryptocurrency industry from "Bitcoin 'flash crash' again":
- The amount of cryptocurrency
On January 1, 2022, according to a report released by Finbold, on January 1, 2021, the number of cryptocurrencies in the world was 8,153, and as of December 31, 2021, the number was 16,223, an increase of about 98.98% from January. According to Finbold data, 8,070 new tokens were created in the crypto industry in 2021, with an average of about 21 new cryptocurrencies being launched on the market every day. According to another data, about 5,000 cryptocurrencies were added to the crypto market from January to October 2021, while more than 3,000 cryptocurrencies entered the market in November and December.
- The scale of cryptocurrency users
According to relevant data, as of June 2021, the number of global cryptocurrency users has reached 221 million, of which it took only four months to increase from 100 million to 200 million users. The user growth that began in January and February 2021 was more driven by Bitcoin, but since May it has been thanks to altcoin adoption, which has seen the number of users increase from 143 million at the end of April to 221 million in June, surging nearly 80 million new users, most of whom are interested in tokens such as ShibaToken (SHIB) and Dogecoin (DOGE). Entering the second half of 2021, the growth rate of user scale has slowed down, and as of December 29, 2021, there were 295 million cryptocurrency users worldwide, an increase of 178.30% compared to the beginning of 2021.
-- The scale of digital currency transactions is growing rapidly
According to CoinGecko's 2020 Digital Asset Industry Annual Report, in 2020, the total transaction volume of the world's top nine decentralized exchanges and the top nine centralized exchanges increased significantly, from $131.3 billion at the beginning of 2020 to $534.7 billion at the end of 2020.
——The United States has become the world's number one destination for bitcoin mining
According to the latest research published by the University of Cambridge, the United States has replaced China for the first time as the world's number one destination for bitcoin mining, accounting for more than 1/3 (35.4%) of computing resources. Compared with September last year, the output of bitcoin computing power from the United States has increased by 428%. followed by Kazakhstan, accounting for 18.10%; the third is Russia, accounting for 11.23%; Canada is at the top with 9.55%.
JPMorgan analysts wrote in a note that the main impact of the quadrennial halving event is not the price of bitcoin, but the mining of bitcoin. As unprofitable miners exit the Bitcoin network, they expect the industry to consolidate, with publicly traded companies most likely to gain market share. JPMorgan Chase & Co. expects Bitcoin to cost $42,000 to produce after the halving. It is important to note that the cost of production of Bitcoin has historically been considered the lower bound of the price of Bitcoin. The bank noted that despite the recent recovery in the crypto market, venture capital financing remains subdued.
Yu Jianing, co-chairman of the Blockchain Special Committee of the China Communications Industry Association, pointed out that digital assets led by Bitcoin can be regarded as a "future asset", and its value can effectively pass through the economic cycle. However, as a highly volatile asset, the price of Bitcoin may experience wild fluctuations in the short term, which largely depends on factors such as market sentiment, macroeconomic environment, and regulatory policies.
Note: This article is for content purposes only and does not constitute any investment advice.
Prospective Economist APP Information Group
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