Recently, global financial markets have fallen sharply, triggering a chain reaction. Stock markets, bond markets, popular commodities, and gold in various countries have not been spared. The factors that make up this crisis are very complex. In the short term , the black swan incident that the New Crown epidemic spread to the world, in the medium term , the conflict between Saudi Arabia and Russia ’s oil price war has intensified, and in the long term, the global stock markets have released historically high risks. bomb.
From the underlying logic, Bitcoin has no correlation with the real economy and traditional financial markets, so it has anti-risk and anti-inflation characteristics. However, the 11-year history of the birth of Bitcoin has not yet passed the test of a systemic financial crisis. The fact that is currently showing is that Bitcoin has suffered a fierce decline that far surpasses mainstream financial assets, dropping from $ 7,300 to $ 3,800 within 48 hours, with a maximum decline of nearly 50%.
why? How to do? Presumably this is what everyone wants to know most. The author interviewed representatives of the industry in exchanges, mines, and wallets to face these two issues.
- There is no doubt about Bitcoin's safe-haven properties. Will there be spring in the altcoin?
- 5 reasons to reveal why Bitcoin skyrocketed
- The logic of bitcoin's ups and downs
- Market Analysis Report: Bitcoin fell under pressure, halving the bull market gradually drifting away?
- Is it a bullish or a bullish market? Bitcoin lightning broke through $4,600!
- Bitcoin market: 6 months need to be patiently lurking, the bull market will be late but will not be absent
People in the circle marked the two-day market as the "3.12" tragedy. What caused the tragedy was a series of inevitable and contingent events.
Bitcoin has no consensus on risk aversion properties
In the past ten years, affected by the Federal Reserve ’s quantitative easing policy, the U.S. federal funds rate has remained close to zero interest rates for a long time. In Europe, negative interest rates have even appeared, and global liquidity has flooded. This has caused a lot of funds to start looking for high risks. Assets for higher returns. Bitcoin also benefited from this, and a large amount of funds poured into it, pushing up the price of Bitcoin.
As the uncertainty of the global economy caused by the epidemic has increased, a large amount of funds have begun to flow into safer places, that is, to safe-haven assets. OKEx Research principal researcher William said: At least so far, Bitcoin is still a highly volatile risk asset, with the highest volatility in the world.
The so-called "safety assets" here are risks and uncertainties in finance. Statistically, they are "variance" or "standard deviation", which is what we often call market volatility. In other words, The true measure of whether an asset is a safe-haven asset is mainly to see if its volatility is small enough. At present, the main safe-haven instruments are gold and government bonds. The volatility of gold and government bonds is relatively small, and the volatility of bitcoin Globally, how can such a high volatility asset be called a safe-haven asset?
Killer whale selloff prevents economic depression
According to Tokenview data, tracking the Bitcoin whale address with more than 100 holdings, we can see that the large amount of transactions on March 12 reached a peak of nearly one month, with 1839 transactions. The omen appeared on March 9th, with 1054 large transactions. The data of QKL123 also shows that the net outflow of funds in the past seven days was 15.3 billion, with the largest peak not on March 12 but on March 8 and 9, although there is a lot of water in the exchange.
Another more convincing piece of evidence is that Veribit CEO Roy Murphy found that a BTC address that had not been moved for 10 years was moving. Why is the movement of the giant whale so interesting? Because one of the side effects brought by the 10-year soaring history is that the early holders' costs are very low and the quantity is very large, which easily constitutes a considerable manipulation of the price of Bitcoin. The data of QKL123 shows that the top 100 address rich list holds 15.39% of the total.
Therefore, the uncertainty of Bitcoin's price first comes from people's insecure feeling that its price may be manipulated, which is also the fundamental reason why Bitcoin ETF holdings fail to pass. In the traditional asset market, when the shareholder's shareholding ratio is higher than 5% (including reaching or exceeding 5% after increasing the shareholding and exceeding 5% before reducing the shareholding), an announcement must be made. In addition, there are restrictions on the time and quantity of buying and selling, which is subject to strict supervision by the CSRC. The digital currency market is undoubtedly free. Any large address transfer will cause infinite reveries. This problem has not been solved for a long time.
Unbridled leverage is the mastermind
On the issue of liquidation, if no one is convinced, they will serve the currency circle. Coin data shows that 78,639 people have been victims in the entire network in 24 hours, with a total of 1.91 billion US dollars of short positions, equivalent to 13.3 billion yuan. The largest single short position occurred in Huobi-EOS, valued at 23.91 million US dollars. The digital currency market is particularly prone to stomping events. This is because it does not have a traditional securities fuse mechanism, and it is caused by uncontrolled leverage.
Wan coin Hou Fahai summed up on Weibo: This time it did reveal a lot of problems, especially bmx. Only the btc margin caused the eth to continue to sell out, which also needs to be undertaken by btc. The profit part of the hedging order cannot be included in the margin. However, btc was severely inadequate due to the card being stuck on the transfer account, and the opaque warehouse receipts were not transparent, so that no one dared to pick up the corpse later, fearing that it would become a corpse.
More critical is the lack of a fusing system, so that the market can slow down and wait for liquidity to keep up. Binance's forced take profit also caused the market to lose its hedging role, and arbitrageurs had to sell on other platforms.
But in the end he was still full of faith, even if there were problems. btc is still the most powerful currency in human history, providing liquidity 24 hours a day, which is hardly imaginable in other markets.
Liquidity that can't keep up is an accomplice
Coincidentally, DeFi also exposed its biggest problem in this market, lacking liquidity. Due to violent fluctuations in the ETH price, a large number of loans fell below the mortgage threshold, which triggered the liquidation process, which triggered the first MakerDAO history to repay bad debts through the auction of MKR.
Subsequently, the MakerDAO community initiated and voted to adjust multiple risk parameters, including reducing the Sai stabilization fee by 2% to 7.5%, reducing the Dai stability fee to 4%, changing the DSR to 4%, and migrating the contract debt ceiling. From 20 million to 10 million.
Netizens said with a smile, this is the DeFi young mother is cutting interest rates. Xu Yingkai, the founder of BlockVC who pointed out the MakerDAO liquidation problem yesterday, commented: " These DeFi never consider extreme liquidity issues . Like BitShares then, they can only manage the auction of tokens in order to repay bad debts with insufficient mortgage. "
After this round of slump, there are at least three questions worth thinking about: 1. Should there be a consensus in the industry to appropriately reduce leverage? Driven by the acquisition of users and the stimulation of platform currency by many exchanges, leverage has become increasingly unrestrained. Decentralized financial markets have not been able to explore their own innovation path, but have learned all the games on Wall Street, like a casino. 2. For DeFi, the adaptability to extreme market conditions is too low, and the stress response is too slow, which makes it look like a big toy. 3. What we call consensus is completely based on code and market. What we lack is not only a means to stop, such as fusing, but also a way to promote these new consensuses. The digital currency market still has a lot of gaps in governance.
How to do?
Standing in the present moment, it is meaningful to trace the cause, but more importantly, see how traumatic the industry is at the moment? What efforts have the industry made to make up for the losses? Will these measures prevent another fall in the same place?
60,000 mining machines were severely affected, the mine owner urgently opened the brakes
Babbitt interviewed Chen Lei, the founder of the bitcoin whale, Wang Chao of Bitpie COO, and Shao Jianliang, general manager of the Jianan Yunzhi Blockchain Division, and asked about the impact of this round of decline on them.
The direct impact of the currency price crash is the mining circle. The founder of BitBlue Whale Chen Lei told us that after today ’s crash, about 60,000 mining machines in four mines were severely affected, and high-power machines have reached the shutdown price. Some cloud computing power platform customers generate customer complaints, and some customers who have not experienced it are more anxious. "
"We adopted an emergency mechanism urgently. The data in the morning was that high-power machines were shut down once they were higher than 0.22. We have opened or temporarily adjusted the price of the machines hosted in various places according to customer requirements. 20%. We have sufficient risk control mechanisms to ensure the maximum operation of customers' computing power. The computing power market will always be dynamically adjusted. Ultimately, it depends on electricity costs, shutdown order, and network computing power. After adjustment, it should be re-adjusted. Back to a certain equilibrium. "Said Chen Lei, founder of BitBlue Whale.
In contrast, wallets are a tool for users to keep encrypted assets, and have not been affected much. "When the market fluctuated violently, many users had the need to sell or bottom out, or they wanted to put assets into their wallets because of fear, which caused the number of wallets to send and receive to skyrocket, which created huge short-term server pressure, so we The server was upgraded urgently, "said Wang Chao, a COO of Bitpie.
Future trend analysis, does the halving market still exist?
Many new investors entering the currency industry have seen such a market for the first time. Different from the plunge in 2018, this round of market is not a big bubble blown by the blockchain itself. To a certain extent, it can be said to be a disaster, so many people are wondering, how to cut it off? Can halving the market still come? Can you give us some practical suggestions?
OKEx Research principal researcher William said the analysis was from a technical perspective. Since mid-to-late February 2020, the Bitcoin market has gradually formed a symmetrical triangle. This is a common finishing pattern in technical analysis. Its upper limit is a downward slash and the lower limit is an upward sloping line. If the price breaks above the resistance line, it is a bullish signal; conversely, if the price falls below the support line, it is a bearish signal. After the Bitcoin price broke through the support line at the end of February, it actually indicated that the Bitcoin market has entered a downward trend.
"We must be realistic and correctly recognize where the market is, and we should not be lucky. If Bitcoin investors are still investing in Bitcoin with the expectation that" halving the market price will increase the price of Bitcoin ", I believe these investments In the future, they will still face greater market risks. "
The founder of BitBlue Whale Chen Lei analyzed the advantages and disadvantages from the perspective of the mining circle. The pressure of the halving cycle is released ahead of time. The mining machine sales market was originally waiting to see the mood, and now it is more difficult to make a decision. Therefore, he thinks that the moment is definitely not the hardest time, the market will increase the worry, and Bitcoin may be further affected. At present, players who need cash flow are relatively hard, and the combined effect of halving the cycle may have a difficult situation.
"This is the market normal. Players come and go. The industry is gradually upgraded during ups and downs. Players with rich risk control methods, abundant cash flow reserves and low leverage pressure will be safer. From another perspective, the industry's cash flow is tight. When the elementary transaction is sluggish, it may be time to be in danger. The new customers who signed with us during the trough period in March and April of last year, in fact, have good returns. The key is to be solid in preparation for risk control. Hurry. "
Shao Jianliang, general manager of the Jianan Yunzhi Blockchain Division, said relatively positively: the future trend will be upward in the long term, and it will be affected by the fluctuations of the world economy in the short term. In terms of asset volatility, it is more severe than other assets. The reason is also Because he is the most mobile. How much the price of bitcoin can fall, the related indicators look at US stocks. U.S. stocks represent the trend of the global economy. U.S. stocks have not improved, and other large assets such as Bitcoin will not be realized.
"After the global economy emerges from the panic of this epidemic, Bitcoin will return to his fast lane. Now we must hold steady, sit down, and don't fall."
Bitpie COO Wang Chao also held a similar view: BTC's performance in this global epidemic crisis was not satisfactory. But it should also be seen that this epidemic crisis is almost arguably the worst event experienced by all human beings collectively since World War II, not even one. In this case, all mankind is a community of fate, and no one can survive alone.
"The epidemic will eventually pass, Bitcoin's intrinsic value will not disappear, and blockchain technology will continue to develop rapidly. I am still optimistic about the future of crypto assets and blockchain."