Media: Is Bitcoin "wake up"?

Bitcoin still lacks enough practical scenarios, and eventually it has to be converted into other sovereign currencies to be free to consume. This leads to the rapid attraction of funds when the expected price rises, and when the expected price falls, it will quickly cause Run on.

The bitter currency, which has been quiet for more than a year, seems to have suddenly awakened from the "sleeping dream" and once again showed an upward trend. In addition to the short-term correction after a single day's surge, the overall trend showed an upward trend in the past three months, and it only slowed down until it rushed to a single piece of about 9,000 dollars.

In the eyes of some industry insiders, the current uncertainty in global trade and the situation in some regions is the main reason for the rise of Bitcoin. So, will Bitcoin continue to rise in the coming period?

Rising risk

 

In the past one year or so, Bitcoin has rushed to nearly $20,000 in the "cloud" and has fallen to the bottom of about $3,000. Today, the long-lost bitcoin is known by some market players as the best performing asset in the world since 2019.

"$9,000, what about the next operation?" The bitcoin in the hands of Bitcoin investor Liu Wei has risen from a single $3,350 in January, with the biggest increase of 170%, but as Bitcoin broke through the $9000 mark, He suddenly felt a little embarrassed.

Liu Wei began investing in bitcoin in 2015. The intermediate price has been ups and downs. Most of the friends who used to invest together have left the market. Only he holds the "Buddha" mentality and holds it to this day. The current price has brought new hope to him, but it is a bit embarrassing. As an investment veteran, it is only to make up for the loss of the previous rounds of "waist", and not to lose. Continue to add to the bottom of my heart, and apparently did not reach psychological expectations.

In any case, the recent breakthrough of $9,000 is still enough to make investors excited. The price of the coin shows that the unit price of Bitcoin started from about $3,487 on February 9th, and the highest price on May 31st reached $9,063, a record high this year. But on the same day, Bitcoin fell quickly, starting at $8351. It is gradually warming up and fluctuating around $8,600.

Not just bitcoin, cryptocurrencies have recently shown a rising trend. According to the weekly data of the Firecoin blockchain industry, the market value of global blockchain assets rose by 21.76% from May 13 to 19 during the period of rapid growth. Among the cryptocurrency items with a market capitalization of TOP100, as many as 93 projects have market values ​​that have risen to varying degrees.

The cryptocurrency third-party analysis platform cryptocurrency market value website statistics show that as of June 2, the global market value of blockchain assets reached 271.3 billion US dollars. This market value has roughly exceeded Disney.

For cryptocurrencies such as Bitcoin, there is a risk in any big rise. Ma Yuantian, a researcher at the Fire Coin, said that in the recent global economic volatility, some investors viewed Bitcoin as an independent asset that was not affected by a single factor, so the price of Bitcoin also rose. However, its price volatility is fierce and investment risks cannot be ignored.

Bitcoin survival logic

 

2019 is the 10th anniversary of the official birth of Bitcoin. In the past 10 years, there has been no shortage of large fluctuations. Therefore, in the face of this round of upswing, many investors have been more rational and have no rush to start.

According to data from the financial services provider, on January 6, 2013, the price of a bitcoin was only $13.15. On December 16, 2017, the price of a single price soared to $19,200, reaching a historic peak, but then "falling down the altar." Since then, in February 2019, bitcoin prices have continued to fluctuate downwards, hitting a low of around $3,100.

The sharp rise and fall is more profound in Xiao Lei's memory. He said that Bitcoin has a market-recorded "crash" four times: the first time was from 2011 to 2012, from $0.95 to $32, and then another way to $2, the highest drop was 94%; The second plunge was in the first half of 2013, bitcoin prices rose from 13 dollars at the beginning of the year to 250 dollars at the end of April, but fell to around 40 dollars in less than a week, a drop of 80%; the third time It started to fall from above $1,000 at the end of 2013. By the beginning of 2015, the price of Bitcoin was less than $150, a drop of more than 85%. The fourth time was from about $20,000 at the end of 2017, falling to $3,100. Nearby, the decline is close to 85%.

Judging from the reasons for the skyrocketing, the first time it was still in the early stages of growth, it is not surprising. “In 2011, there were almost no decent exchanges in the world. Participants were mainly geeks and a few adventurers. Bitcoin was concentrated in the hands of very small people. The market lacked continuity, as few players held a little sell-off. Behavior, the price is facing a collapse." Xiao Lei analysis.

This round of plunge that began in late 2017 is worthy of taste and has a lot to do with the listing of Bitcoin futures on the Chicago Mercantile Exchange. On the one hand, futures listing means that bitcoin enters the legal capital trading market, and on the other hand means that more funds begin to have opportunities to short and influence prices. After the listing, the biggest good news came, the bitcoin price reached an all-time high and began to fall rapidly.

In the eyes of some industry insiders, the violent fluctuation of bitcoin price is precisely the logic of its survival. The resurgence of bitcoin after repeated crashes reflects the greed of investors to some extent.

“Sovereign countries have difficulty in allowing Bitcoin to become a financial instrument that can be exchanged with the legal currency at any time in the mainstream financial system. Therefore, Bitcoin can only exist in privately-owned exchanges for a long time.” Xiao Lei believes that in some exchanges, the price It can be manipulated by humans. When there are more opportunities and channels for traditional capital to participate in bitcoin transactions, the probability of price manipulation will increase, which is one of the biggest risks Bitcoin currently faces.

Bitcoin still lacks enough practical scenarios, and eventually it has to be converted into other sovereign currencies to be free to consume. This leads to the rapid attraction of funds when the expected price rises, and when the expected price falls, it will quickly cause Run on. As a decentralized financial asset with a market value of more than 8 trillion US dollars, gold often fluctuates greatly, so it is considered that the price will become stable as the market value of Bitcoin continues to expand. As long as Bitcoin does not become a real currency, and there is no technical loophole, then the skyrocketing will always be accompanied.

Future direction

 

What is the reason for Bitcoin’s sudden sharp rise recently?

Some analysts pointed out that the current uncertainties in global trade and economic development prospects have increased, and the risk of conflict in some areas has increased. Along with this, the European and American stock markets have fallen, and the bitcoin-linked gold has continued to rise due to emotional influence. This is an important reason for the recent acceleration of Bitcoin. Bitcoin has demonstrated safe-haven assets in this process.

Xiao Lei also believes that this round of bitcoin's rise is due to the restructuring of global risk assets and the expansion of crypto-asset investment channels. Recently, market volatility such as securities and foreign exchange has intensified. Global investors are looking for assets that can be hedged. Traditional safe-haven assets are more dependent on the real economy and inflation expectations. Bitcoin is more like a sensitive index and gains certain asset hedging advantages. .

At the same time, some mainstream international investment institutions have begun to intervene in the field of cryptocurrencies such as Bitcoin to provide related services to users. Guo Yuhang, the principal of China's blockchain application research, said that not long ago, internationally renowned companies such as JP Morgan Chase, Facebook, and IBM announced that they had entered the field of cryptocurrency, and the continuous release of positive interests has gradually restored confidence in the cryptocurrency market. In addition, Bakkt, a crypto-equity trading platform developed by the New York Stock Exchange's parent company Intercontinental Exchange, announced that it is advancing its plan to settle bitcoin futures products. User acceptance testing will be launched in July. In the long run, this helps individuals and institutional investors to buy bitcoin-related products, which is considered to be substantial.

With the arrival of the summer flood season, the price of mining will be lowered, and the output of Bitcoin will also increase, bringing liquidity to the market. Bitcoin has been dug up 17732.26 million, accounting for 84% of the total 21 million, and the difficulty of mining will be further increased in the future. It is expected that Bitcoin will resume production again next year.

Xiao Lei said that at present, the subject holding bitcoin is changing. The structure dominated by geeks, adventurers and ordinary retail investors who have a dream of riches has begun to change. But he also pointed out that changes in the structure of investors can not be completed in a short period of time, requiring repeated price fluctuations to stimulate the original user to sell, and new users to intervene.

"There is still a certain bubble in the current blockchain industry, which needs to be properly guided." Ma Yuantian said.

Source: Global Magazine Issue 12

Author: Mao Zhenhua