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Bitcoin plummeted by 10%! A complete collapse? The loss of the function of money causes panic in the market!
Bitcoin: From "Digital Gold" to "Tulip Bubble"?
Remember Bitcoin, which was once known as "digital gold"? The Bitcoin that claims to be able to subvert the traditional financial system and become the currency of the future? Now, it is mired in the "Trump vortex", with prices skyrocketing and plummeting, more like a thrilling gambling game than a currency.
The story begins with Trump, the former president of United States known for his "Twitter governance", who once showed great interest in Bitcoin. Not only does he openly support Bitcoin, but he even plans to include it in the official reserves of United States, trying to challenge the status of gold and the dollar. For a time, the price of bitcoin rose, as if it saw the dawn of becoming a world currency.
The good times did not last long, and with the end of Trump's political career, Bitcoin also ushered in the "darkest moment". Prices plummeted, the market panicked, and the dream of "digital gold" was shattered and reduced to a "tulip" in the hands of speculators.
What made Bitcoin go through such a dramatic transformation? Is it the hope of a future currency, or is it yet another bubble about to burst?
Some people blame Bitcoin's collapse on the fading of Trump's halo, believing that Bitcoin, which has lost its political asylum, has naturally lost its value support. But is it really that simple?
Let's look at the deeper causes.
Bitcoin has its own flaws that are difficult to overcome. Prices fluctuate wildly and the lack of a stable value anchor makes it difficult for them to assume the basic functions of money. Imagine if you bought a cup of coffee with Bitcoin today and the price of Bitcoin plummeted tomorrow, the cost of that cup of coffee would be ridiculously high.
Bitcoin's decentralized nature has attracted a group of freedom-seeking fans, but it has also brought regulatory challenges. Illegal activities such as money laundering and dark web transactions have found the "extralegal land" of Bitcoin. The attitude of governments around the world towards bitcoin has gradually shifted from wait-and-see to vigilance, and the introduction of regulatory policies has undoubtedly had a huge impact on the bitcoin market.
In May 2021, the Chinese government announced a total ban on Bitcoin mining and trading, triggering a cliff-like drop in the price of Bitcoin. According to the University of Cambridge, before that, China contributed more than 60% of the computing power of Bitcoin mining. The introduction of this ban has undoubtedly dealt a heavy blow to the bitcoin market.
Moreover, with the rise of central bank digital currencies in various countries, the competitive pressure on Bitcoin is also increasing. Legal digital currencies such as the digital yuan and the digital euro not only have government credit endorsement, but also become increasingly mature in technology, posing a strong challenge to Bitcoin.
Just imagine, when you can choose a safe, stable, and convenient fiat digital currency, will anyone be willing to take the risk of holding the volatile Bitcoin?
We also can't ignore the positive aspects of Bitcoin. As a cryptocurrency based on blockchain technology, Bitcoin provides us with a whole new financial instrument and payment method. Its characteristics of decentralization and anonymity also provide convenience for transactions in some specific scenarios.
But it is undeniable that Bitcoin has now deviated from its original design philosophy and has become a tool for speculation. It is like a mirror that reflects people's desire for wealth and disregard for risk.
Where is the future of Bitcoin headed? Will it be reborn from the fire, or will the bubble burst?
Perhaps, time will tell. But one thing is certain, that is, any kind of financial instrument can only achieve long-term development if it truly serves the real economy.
I would like to raise a question to arouse everyone's thinking: in today's rapid technological development, how should we view the development of emerging financial technology? How to balance innovation and risk so that technology can truly benefit mankind?
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