What are the reasons behind Bitcoin's break below $10,000?

What are the reasons behind Bitcoin's break below $10,000?

Carnage came to an abrupt end, bitcoin prices fell below $10,000

Since May, Bitcoin has continued to break through the high level, from 7,000 to 8,000 to 9000 and then to 10,000. Bitcoin prices have shown a good form, and the bull market is coming out. Last month, on June 27th, Bitcoin broke through $13,000, an increase of more than 20%. The sudden and quiet currency circle ushered in an unprecedented carnival.

The June rise was related to good news. The most important news was that on June 18th, social giant Facebook officially announced the Libra white paper on digital currency (stable currency), which caused great shocks inside and outside the circle, especially the currency. In terms of circle, the effect is immediate. People think that Facebook's currency is used for mobile payment, which is a great benefit for the currency circle. It not only brings more users to the currency circle, but also increases the exposure rate for digital currency, and can also drive digital payment in small amounts. Landing on a large scale.

In addition to Facebook's currency, there are rumors in June that EOS will release a major upgrade; in early June, the founder of the wave field, Sun Yuchen, successfully captured the Buffett luncheon… June is good, but the good times are not long, enter the seven In the month, the market sentiment reversed, and the “waterfall” plunged, and the bitcoin market became a “roller coaster”. Last weekend, the digital currency led by Bitcoin ushered in a “waterfall” plunging market, especially in the morning of July 15 (that is, yesterday), bitcoin prices fell below $10,000, and the biggest drop in 24 hours exceeded 10%. Other digital currencies also experienced "fall-like" downturns, with a drop of up to 20%, and investors mourned.

What are the factors that influence market sentiment?

The situation of digital currency is “7 days × 24 hours” constantly changing. What we need to be clear is that there are both rising and falling prices, which are normal phenomena. There can be no tokens in the market that can only rise or fall. It is normal for the market to rise and fall. Just as the tides of the natural waters are rising and falling, it is normal. However, we can link the actual situation with the rising and falling market, and sum up the factors that affect the market sentiment, which in turn drives the price increase and decline. To sum up, the factors that influence market sentiment can be divided into the following aspects:

1. Policy factors: Looking at the milestones in which bitcoin prices have risen or fallen in recent years, policy factors can be said to be one of the most important factors affecting the price of digital currencies. In 2013, the first round of bitcoin's bull market was triggered by the fact that Germany, Japan and other countries first recognized the world currency function of Bitcoin. Bitcoin rose from 13 US dollars at the beginning of the year to 1,200 US dollars at the end of the year, a 90-fold increase; in 2017, China Seven ministries and commissions such as the People's Bank of China issued the "Announcement on Preventing the Risk of Subsidy Issuance Financing", calling for all domestic token financing projects, and shutting down the token financing platform and trading platform. This matter directly caused the currency people to panic and sell their hands. Coins, the industry entered a cold winter, bitcoin fell to freezing point, from 4,900 dollars before the 1994, all the way down to 2,900 dollars.

2. Investor demand factors: Investors' demand for digital currency will also affect the rise and fall of digital currency prices. When the real environment is not good and the financial situation is unstable, the digital currency can play a role in avoiding the risk of depreciation of the French currency. As a result, people's demand for digital currency will increase, which in turn will drive up the price of the currency. At present, the reality of many countries in the world is very serious, or encountering war, facing economic sanctions, or political turmoil, and the financial environment is quite unstable, which makes citizens in these countries more inclined to invest in digital currency to avoid risks, such as In Iran, which is suffering from the US economic sanctions, the demand for digital currency is increasing in the Iranian region, and bitcoin mining or investment is highly enthusiastic. Another real factor is that when investors are frustrated in the stock market and the gold market, they will turn to new investment areas, such as digital currency, which will inject new investment power into digital currencies, such as institutions and large-scale entry.

3. Industry Leadership Factors: Digital currency prices are also largely influenced by industry leaders or platforms, or by digital currencies with higher market capitalization. Some moves by institutions or platforms that have a lot of influence in the market will affect the market. In terms of this year's bull market, the starting point of this year's bull market is generally considered to be related to the IEO project launched by the first-line trading platform. And we can see a general trend in the past two months of the digital currency "surge and plunging", that is: bitcoin rises when the cottage currency rises, bitcoin falls when the cottage currency falls, which shows: the highest value of the digital currency (Bitcoin) affects the market for the entire digital currency market.

4. Incident factors: hacking attacks, trading platforms being blocked, and project parties running, these unexpected events will also affect the currency price.

What are the reasons for this round of bitcoin plunging?

Above we have a macro summary of the factors affecting the market, according to the above logic, we can easily find out the reasons for this round of bitcoin plunging.

1. Policy factors: US President Trump sang the bitcoin, and US official agencies tend to suppress the digital currency industry.

Recently, because of the Facebook currency issue, digital currency has become the focus of various government agencies in the United States. US President Trump said on social media Twitter on the 11th that Bitcoin and other cryptocurrencies are "not money," and he said that the lack of regulated cryptographic assets would encourage illegal activities, including drug trafficking. According to US media reports, the US Internal Revenue Service intends to update guidance on cryptocurrencies in recent weeks. US lawmakers are discussing a bill to prevent US “large technology institutions” from issuing cryptocurrencies, prohibiting large technology organizations from establishing, maintaining or operating digital assets for use as exchanges, value stores or any other similar function. A series of actions by US official agencies were called "the US version of the September 4th Incident", and the resolute attitude of supervision has adversely affected the price of the currency.

2. Investment demand factors: The Fed cut interest rates and diversified investment models, and investors are faced with more investment options.

The Fed’s interest rate cuts are already a matter of course. US President Trump has said more than once that the Fed will continue to cut interest rates. A cut in interest rates means that the yield on bank deposits will fall and the currency will depreciate in disguise. Capital is profit-seeking. Investors who are not willing to depreciate their currencies will either use the low borrowing costs brought by interest rate cuts to increase consumption; they will either look for new habitats and actively invest in products with higher yields. For example: stock market, gold. It can be said that the Fed's interest rate cut is a booster for the US economic growth and is good for the US stock market. In this way, given the current regulatory integrity of stock investment, investors may prefer to prioritize stocks for investment, while abandoning digital currencies with unclear regulatory attitudes and greater market volatility.

3. Industry leader factors: Facebook Libra project is blocked, the project progress is getting weaker

Facebook is a social platform giant with more than 2.7 billion users. Facebook released a white paper on the stable currency Libra project in June (this project was described as applied to mobile payments), which is considered to be an important factor in the surge in bitcoin in June. But goodness may become a bad thing, just like the truth of music. Facebook’s currency was soon “encircled” by several countries headed by the United States. The scandals of King Facebook were smashed out, and the security and operational methods of Facebook’s Facebook members were questioned. For Facebook to issue currency, the US attitude can be said to be very tough. Facebook must be under supervision and must accept interrogation hearings from relevant government agencies. Only in this way can it be possible to continue the follow-up project.

US President Trump wrote on Twitter that Facebook Libra has no basis or is not reliable. For the currency circle, in the short term, Facebook currency seems to have become an empty joy, and the enthusiasm for digital currency such as Bitcoin has also declined.

4. Incident factors: Plustoken runs, investors worry about speculative risks and security issues in the bitcoin market.

There are rumors that the largest fund in the currency circle, Plus Token, involves billions of bitcoins. When Plustoken was in the water in June, billions of assets were locked, and bitcoin in circulation was reduced, causing bitcoin to rise rapidly. . With the collapse of Plustoken, the tens of billions of assets that were locked out were slowly released, which became the biggest negative for the market.

Has the bull market ended like this?

Recently, the market has fluctuated drastically, causing panic among investors. Many people are questioning, is the bull market ending like this? I personally think that it is not over. Why do you say that? Because this year's year is quite special, this year is 2019. It is less than one year after the next halving of Bitcoin in 2020. According to the judgment of the bitcoin cycle, it should be in the early days of the bull market. The two-day plunging trend should not affect the development of the follow-up market. In addition, as far as the current market is concerned, Bitcoin has already ushered in a small upward trend, and other digital currencies have also risen. As of the time of publication, the spot price of OKEx Bitcoin is around $10,736. (OK Intelligence Bureau)