Bitcoin staged a "roller coaster", and you lost 20,000 yuan when you rushed in! More than 110,000 people on the whole network exploded in 24 hours, and 2.9 billion yuan evaporated! What's going on?

National Business Daily

2024-05-25 08:37Published on the official account of Sichuan Daily Economic News

Edited by: Du Yu

As soon as the Ethereum spot ETF was approved, the virtual currency market ushered in a sell-off.

On the afternoon of May 24, Beijing time, Bitcoin suddenly staged a "big dive" in intraday trading, and Ethereum, Binance Coin, Dogecoin and other currencies also fell.

Industry insiders said that Bitcoin fell sharply on the 24th, mainly because after the good news that the Ethereum spot ETF was approved, most investors' optimism faded and they tended to take profits.

Bitcoin staged a "roller coaster", and you lost 20,000 yuan when you rushed in! More than 110,000 people on the whole network exploded in 24 hours, and 2.9 billion yuan evaporated! What's going on?

Image source: Visual China-VCG111482688101

From 15 o'clock on May 24, Beijing time, Bitcoin fell below the three important thresholds of $70,000, $69,000 and $68,000 one after another. According to the China Securities Journal, this means that investors who bought bitcoin after the approval of the Ethereum spot ETF in the early morning of the 24th suffered heavy losses, and the loss of buying one bitcoin was as high as 21,731 yuan.

As of press time on May 25, the latest price of Ethereum is $3727.89, down 1.53% in 24 hours; Bitcoin recovered its losses and was last traded at $68,528.5, up 0.81%.

This "roller coaster" trend has left a lot of investors with no money. According to Coinglass data, in the past 24 hours, more than 110,000 people in the virtual currency market have liquidated, with a total amount of US$399 million (about 2.9 billion yuan), of which US$303 million in long orders and US$95.65 million in short orders.

Image source: Coinglass

On May 23, local time, the U.S. Securities and Exchange Commission (SEC) announced that it approved plans submitted by the New York Stock Exchange, the Chicago Board Options Exchange and the NASDAQ for Ethereum spot ETF trading.

Image source: U.S. Securities and Exchange Commission website

It is important to note that this approval does not mean that the Ethereum ETF is fully approved. The SEC approved Form 19b-4 for Ethereum spot ETFs, involving the trading rules, listing standards and fee structure of the product, etc., and then major issuers still need to wait for the approval of their specific ETF listing plans, that is, the registration statement of Form S-1 will take effect, before officially stating that "Ethereum spot ETF has been approved for listing".

On April 20, Beijing time, Bitcoin completed the fourth halving in history, and the mining reward of the Bitcoin network was halved from 6.25 bitcoins to 3.125 bitcoins. The halving event had a big impact on the income of Bitcoin "miners".

Research firm Kaiko said the virtual currency market could face more selling pressure as the revenues of Bitcoin miners who hold large amounts of virtual currency assets fall sharply. "If 'miners' are forced to sell even a small portion of their assets next month, it will have a negative impact on the market. During the summer months, virtual currency trading activity usually slows down and liquidity is insufficient. ”

According to Kaiko data, the two largest publicly traded bitcoin mining companies, Marathon Digital and Riot Platforms, hold 17,631 bitcoins and 8,872 bitcoins, respectively, worth more than $1.1 billion and more than $500 million, respectively.

According to a previous report by the Economic Daily, since the advent of Bitcoin, the price has fluctuated all the way, and skyrocketing and plummeting are almost the norm, and the multiple risks faced by the market cannot be ignored. "Risk is intrinsic to financial activity, and the crypto industry is no exception. The cryptocurrency market is facing potential negative factors such as increased macroeconomic uncertainty, the existence of industry 'black swans', and unclear regulatory policies. Zhao Wei, a senior researcher at the OKX Research Institute, a digital asset trading platform, said.

According to the China Securities Journal, industry insiders pointed out that market indicators show that Bitcoin is currently in a consolidation phase. Key indicators such as exchange inflows, momentum, and the market capitalization-to-realized market capitalization ratio (MVRV) of short-term holders all show signs of slowing market momentum and increasing selling pressure. In addition, the change in the income of "miners" and the cooling of SOPR momentum (the profit margin on expenditure) further suggest that the demand for high-priced bitcoin is decreasing. In addition, one of the main reasons for today's price pullback may be the decline in bitcoin's dominance, indicating that market participants' attention has clearly shifted away from bitcoin.

Zhao Wei, a senior researcher at OKX Research Institute, told China Securities Journal that the causes of Bitcoin and Ethereum price fluctuations are complex, and are affected by a variety of factors such as macroeconomy, global regulatory policies, market sentiment, capital inflows, and internal technological development, rather than being determined by a single factor. In particular, with the frequent emergence of various favorable policies and industries, the short-term market is overheated, and the leverage ratio has increased significantly, resulting in a significant increase in the risk appetite of some investors.

According to a previous report by Beijing Business Daily, Yu Jianing, co-chairman of the Blockchain Special Committee of the China Communications Industry Association, pointed out that as a highly volatile asset, the price of Bitcoin may experience violent fluctuations in the short term, which largely depends on market sentiment, macroeconomic environment, regulatory policies and other factors.

Yu Jianing also reminded that the fluctuation of Bitcoin price is part of its essential attributes, and any investment decision should be based on sufficient market research and personal risk tolerance. Understanding the position of Bitcoin in digital assets and the underlying logic of the relationship between digital assets and the digital economy is of great significance for investment decision-making and market analysis.

The daily economic news integrates China Securities Journal, Economic Daily, and Beijing Business Daily

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