Around 16:00 Beijing time, bitcoin prices broke through $7,500 in a short period of time, and then quickly fell to $7,300, with dramatic fluctuations.
As of press time, bitcoin prices are still at $7,300, a record high of nearly nine months.
Since May 10, bitcoin prices have increased at a rate of 4%, 7%, and 10%, respectively, and in the past three months, bitcoin prices have risen more than 100%.
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Different from the previous IEO “hype”, the price of bitcoin is rising, and the mainstream cryptocurrency is rising. It seems that the cryptocurrency market has been rid of the bear market haze and enter the next cycle with real money. .
While celebrating the return of the Bitcoin king, many cryptocurrency players are also screaming at the price of the carnival, and even regret that they did not start as early as possible, from which they got a piece of cake.
Bitcoin's lead is indeed worth celebrating, but in addition to carnival, there are some questions worth pondering: What is the logic of this bitcoin's rise? How long will this carnival last? Is the “performance” that is soaring all the way brewing new harvests, or will it open the door to a new round of bull market?
First, bitcoin led the rise, the cryptocurrency market picked up
"I woke up with more than 7,000 bitcoins." On the morning of May 12th, the player Jenny WeChat group sighed, not only bitcoin, but someone bought her BCH last night, but did not start because she fell asleep, wake up this morning To see BCH also rose to more than 190 US dollars, Jenny regretted it.
Like Jenny, I regret it. I don’t have a lot of troubles when I get on the bus, because the recent reality of Bitcoin is too unexpected.
At the beginning of this year, Bitcoin prices were still at $3,500, but after a few months of brewing, bitcoin prices have soared in the past few days, from $6,400, $6,800, $7,000, to today's approaching $7,500. Bitcoin is amazing. The speed has continuously broken through the new high, and a dose of stimulant has been injected into the currency circle.
Since the beginning of this year, bitcoin prices have continued to break new highs.
By combing the recent performance of Bitcoin, it can be found that Bitcoin has continued to rise for more than ten consecutive days; if the time dimension is extended to March this year, it can be found that Bitcoin has risen from $3,700 to nearly $7,500, an increase of more than 100%.
If you only look at the increase, Bitcoin has become a very good return on income this year. On May 9, Galaxy Digital CEO Michael Novogratz said in an interview that he expects bitcoin prices to break through record highs in 18 months.
In the face of the excellent performance of Bitcoin today, some people even shouted the slogan "Tonight's 8,000 US dollars" in the exchange group.
However, in fact, this time Bitcoin's continuous rise has come a little "unprepared". There was no strong signal before this. Instead, some recent black swan incidents caused investors to "deterred" the cryptocurrency and missed this. One time quote.
On May 7, the cryptocurrency exchange currency was attacked by hackers. The hacker stole 7,000 bitcoins from the coin security wallet at a height of 575012, worth about 300 million yuan.
Although the currency security sounded quickly, it said that the "SAFU Fund" will be used to fully bear the full loss of this attack. No user has any losses, but the hackers who broke into it have brought shock to the currency circle. The price suddenly fell. In response to the attack, the currency security temporarily closed the function of recharge and coin withdrawal. The latest news shows that the currency has not yet resumed the business.
In addition to the black swan event that the coin has just experienced, the entire currency is still immersed in Bitfinex's billions of IEO "blood sucking" aftermath.
Because the $850 million was seized, Tether borrowed funds from the exchange's Bitfinex, and the incident was caused by the New York State Attorney General's Office. In an instant, the bitcoin price jumped from $5,400 to less than $5,200.
In order to solve the funding problem, Bitfinex decided to use IEO for financing, raising a total of up to 1 billion US dollars. This news shocked the currency circle. In the current currency circle, there is no large-scale entry funds from outside the circle, Bitfinex has to melt such a large sum of money. In this regard, Fundstrat co-founder Tom Lee believes that this $1 billion financing will have a large negative impact on Bitcoin and other digital assets, which may lead to a decline in bitcoin prices.
At the just-concluded shareholder meeting, Warren Buffett insisted that Bitcoin did not produce any value. "This is a gamble."
In the state of negative news, what is the boost of Bitcoin's rise?
Second, why bitcoin is unique
What caused Bitcoin to rise this round? 31QU combed the following reasons:
1 Admission of external funds such as Fidelity and Intercontinental Exchange
Some analysts believe that major financial veteran companies have entered the cryptocurrency market, and the buying pressure caused by a large number of new capital inflows has led to the rise of bitcoin.
According to Bloomberg's report on the 6th of this month, Fidelity Digital Assets, a subsidiary of Fidelity Investments, will launch a bitcoin trading service for institutional investors.
As the world's largest asset management company, Fidelity Investments has a total assets of US$7 trillion and has been aggressively deploying the cryptocurrency industry in the past two years. In addition to the upcoming Bitcoin hosting services, it is actively deploying Bitcoin mining and related energy. industry.
Fidelity is not the only large traditional financial institution to enter the market.
After Bakkt completed the $700 million valuation financing, ErisX announced on April 25 that it launched a spot trading product for institutional customers.
In addition, there are rumors that E-TRADE will provide BTC and ETH transactions to its 5 million customers, and TD Ameritrade is also reporting that it is testing BTC spot transactions. Bakkt and ErisX focus on the institutional market, while E-TRADE and TD Ameritrade focus on the large and growing retail retail market with 5 million users of E-TRADE with a capital of more than $1 billion.
Each of these steps allows more French currency to flow into the cryptocurrency ecosystem, which makes the bull market for the next cryptocurrency even more fierce, and will push the encrypted market value of the next bull market to a new high.
2 Bloomberg: $100 million algorithmic trading is a direct push
Bloomberg cited encryption algorithm hedge funds as one of the reasons for the rise in bitcoin, which may herald a new round of cryptocurrency recovery.
According to Bloomberg News, Bitcoin suddenly rose 20% on April 2, which could be caused by a buy order worth about $100 million. The buy order is controlled by algorithms, one of the three cryptocurrency exchanges in Coinbase, Kraken and Bitstamp. A total of about 20,000 bitcoins were bought in the hour. Bitcoin prices subsequently broke through the $4,000 and $5,000 mark, and soared 23% ($1,000 or more) in one minute.
The report said that although the cryptocurrency hedge fund lost nearly 72% overall last year, some algorithmic funds said that the monthly yield in 2018 is 3%-10%.
"Some people may think that algorithmic trading is a means of manipulation, but it is also a way to improve market efficiency. I am definitely the second view." Oliver von Landsberg-Sadievon Landsberg-Sadie, CEO of London encryption company BCB Group said BCB Group helps clients make large-scale algorithmic transactions to minimize market impact.
In view of the potential development of algorithmic trading in the cryptocurrency industry, algorithmic transactions have begun to rise in the encryption industry in the past.
According to Crypto Fund Research, the number of algorithmic traders engaged in cryptocurrency has increased significantly in the past seven months. Since September last year, a total of 17 algorithms or quantitative funds have been established, accounting for the encryption initiated during the same period. More than 40% of hedge funds.
Last year, cryptocurrency hedge funds lost nearly 72% overall, while some algorithmic funds claimed to receive 3%-10% monthly earnings. The digital currency fund Alphabit Fund began to transform its algorithmic trading six months ago, and the Alphabit Fund has a market size of $400 million. Since November last year, deVere Group, the world's largest independent financial advisory body, has also invested in cryptocurrency algorithm arbitrage.
3 Bitcoin "half-half effect" is emerging
According to the Bitcoin setting, the Bitcoin block reward is halved for about 4 years, and each time it is halved, the bitcoin price will increase by orders of magnitude. This is the price effect of halving bitcoin.
Now, Bitcoin’s four-year block halving is counting down, and Bitcoin is halved by less than 400 days. It is expected that on May 24, 2020, Bitcoin block rewards will be reduced from 12.5 bitcoins to 6.25. The inflation rate will be reduced from 3.8% to 1.8%.
As the third "half" event in the history of Bitcoin, Bitcoin's upcoming production cuts are also highly anticipated. Because almost every year before the halving date of each production, Bitcoin will gradually recover from the bear market, and then gradually open the bull market.
This is true from the historical data of Bitcoin production reduction.
A rule can be found from every bitcoin reduction. The bitcoin price rises almost every year before the halving of bitcoin. This seems to have become a currency consensus.
“In the months before the first two halving incidents, we saw the price of Bitcoin steadily rising, and then with the halving of the reward, the price of Bitcoin also rose,” said Gary Chain, research director at Blockchain. Garrick Hileman said.
4 Bitcoin is the best performing asset of 2019
In the past week, the S&P 500 index suffered the worst week of the year, with both the S&P 500 and the Dow Jones Industrial Average both falling more than 2% and the Nasdaq down 3%.
Fundstrat analyst Thomas Lee believes that recent negative economic events such as "global stock market sharp decline", "volatility index (VIX) soared", "global yield curve slowed down and flipped" have affected Bitcoin prices, let It presents a different trend from other investment targets and becomes the target of new investment targets.
According to Twitter user @Charlie Bilello, bitcoin has now beat Wall Street as a new asset class. In 2019, bitcoin returns are 52%, while crude oil returns are 33% and Nasdaq 100 is 24%. The S&P 500 index is 18%.
According to Canaccord analysts, Bitcoin is one of the best performing assets in 2019.
According to a recent report by The Wall Street Journal, Bitcoin performed well in April. Although it was once affected by the negative news of Tether-Bitfinex, the price briefly appeared, but then it showed a new uptrend and tested the new high in the near future.
The report also pointed out that the recent cryptocurrency market has been very positive, greatly improving the investment sentiment that was hit by the bear market in 2018, and with the continuation of 2019, fundamental growth may cause bitcoin prices to rise further.
5 Bitcoin application scenarios increase
In addition to predicting that Bitcoin will return to the high end of 2017 in the next 24 months, Canaccord analysts found that there are up to 7 million Bitcoins that have not been active for at least six months and are now trading again.
Although the cryptocurrency market is in a bear market in the past year, the infrastructure of Bitcoin has not fallen. Bitcoin has also opened up many new application scenarios this year.
With the explosive growth of Lightning Network in the past year, mobile payment giant Square actively embraces bitcoin payment, the official launch of Bitcoin's first commercial sidechain Liquid, and the fact that millennials do not trust traditional banks will undoubtedly further push the bit. The currency is used by the mainstream.
Liquid is Blockstream's launch of the Bitcoin sidechain, which turns btc on Liquid for faster time and lower commissions. “Liquid will strengthen the Bitcoin ecosystem because customers can trade more securely and more quickly.
HTC is about to launch its next-generation blockchain phone, EXODUS 1s, which will be compatible with Bitcoin's entire node, which means customers can store data across the blockchain on their devices, thereby enabling greater involvement in decentralization and data assurance. Safety.
But Exodus phones can't mine, you can use Zion wallet to store, send, trade Bitcoin, Ethereum, Litecoin, ERC-20 tokens, etc.
According to CoinDesk, Blockstream Satellite is working with startup goTenna to "allow users to conduct bitcoin transactions even without the Internet."
Users can receive blockchain data via satellites deployed by Blockstream Satellite and send signed bitcoin transactions via the goTenna Mesh network without having to connect directly to the Internet.
This means that bitcoin networks with an alternative option are more resilient to disruptions than traditional Internet infrastructures that are susceptible to accidents or natural disasters.
In addition, with the integration of the goTenna network, users can trade peer-to-peer and take advantage of the inherent confidentiality provided by the mesh network to enhance security and privacy.
In fact, there are many analysis about the rise of Bitcoin. For example, the sensitivity of capital to the international situation makes Bitcoin play a safe-haven property. Some people even include CoinDesk's upcoming “Consensus Conference” activities in this round of rising hands.
But the question that more people care about is how long will this sudden price carnival last?
Third, the new cycle or a new harvest?
Global market analyst Alex Krüger once pointed out that if bitcoin exceeds $6,400, it is confirmed that a new bull market in the digital currency market will officially open.
Last week's 31QU translation released "Digital Asset Fund Adamant Capital's latest report" also believes that the next round of bull market is brewing, the giant whale is bottoming out in the low-value area of Bitcoin, once the market control of the long-term establishment is consolidated Bitcoin prices will continue to climb.
The more straightforward explanation is that Bitcoin is currently in the accumulation phase, and the biggest feature of this phase is that value investors are “buying on dips”. After that, the new bull market will push Bitcoin up to trillions of dollars in market capitalization.
In fact, the rapid rise of Bitcoin has surprised most people.
In the small increase in bitcoin in late April this year, DGroup founder Zhao Dong once said, “Now is a rebound, not a bull market”, “The cow will come, but not now”. But today Zhao Dong used "I am not a god" to tune the bitcoin price without deploying as expected.
There are also some cryptocurrency analysts who believe that bitcoin prices may be adjusted back.
According to Coindesk analyst Omkar Godbole, the 14-day Relative Strength Index (RSI) is currently overbought, so there may be a price correction before the next resistance level of $7,411 (September 2018 high). If there is a callback, it may be reversed by the historic 30-day moving average (MA), currently $5,450.
The Crypto Dog analyzes the bitcoin price and said that BTC is currently experiencing a resistance level and the price may have a correction.
Trader Cantering Clark agreed with Crypto Dog's analysis, and he further explained that although the continued trend seems to be "incredibly bullish," the BTC is still at resistance and well above its 20-week moving average. Bitcoin will soon retire, returning to a more organic and sustainable level as buying pressures slow in the coming weeks.
According to NewsBTC's Joseph Young, the rebound was mainly made by old users of cryptocurrencies, rather than by incremental users. “Because of the overall growth in confidence and comfort, the stock of funds in the encryption market is returning.”
Google data also proves this. According to researcher Alex Kruger, the number of "bitcoin" keyword searches is still low, less than 10% of the bitcoin search heat at the end of December 2017 (when Bitcoin was at the peak of $20,000).
There is also a view that Bitcoin's recent small step increase is because the currency is in the USDT, and a large number of USDTs are exchanged for BTC, which lowers the USDT asset reserve ratio, which directly pushes up the BTC price.
The reason why the currency is doing this is that the USDT will have a greater thunder, and in order to hedge, the exchange will go to USDT. After the completion of the USDA USDT shipment, the BTC will also fall back.
While enjoying the price carnival, players can't forget the high risk of bitcoin.
In 2014, the bitcoin of Mt.Gox was stolen and the price dropped from 951 to 309. It was rated as “the worst investment in 2014” by Bloomberg.
Just last year, bitcoin prices fell not only from the peak of 18,824 dollars to 3,245 dollars, but also experienced the longest bear market in the history of bitcoin, listed by Russia's FinExpertiza as "the worst performing investment in 2018."
Because of the rising prices, Bitcoin is now the “best performing asset in the world this year”.
Therefore, despite the rapid rise in Bitcoin, players still have to keep in mind that the cryptocurrency market is a 24-hour endless, unrestricted, and even irregular "battlefield."
FOMO's psychological work, "Reaper" is everywhere, in the confession of the cryptocurrency market, not every time can be fortunate to step on the price drum.
(This article does not make any investment advice)
Text /31QU Xiao Ping Lin Jun