Bitcoin has finally returned to $8,000, but why is it not recommended to chase?

The stock market is cold and the currency market is rejuvenating.

Starting on May 10, bitcoin prices are all the way up. On May 11, the price of bitcoin broke through $6,900; on May 12, the price of bitcoin broke through $7,500; on May 13, the price of bitcoin broke through $7,800; on May 14, the price of bitcoin broke through the $8,000 mark. On the same day, "Bitcoin rose over 8,000 US dollars" on Weibo hot search; as of press time, bitcoin price exceeded 8100 US dollars, compared to last year's lowest point has more than doubled.

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Bitcoin K-line chart of an exchange since March 2 this year shows that the world's largest cryptocurrency is experiencing a recovery, and other cryptocurrencies have also increased slightly.

In the past day, cryptocurrencies such as EOS, ETH, Litecoin and Ripple also showed different degrees of increase. On the Firecoin platform, ETH rose by 13.35%, and EOS rose by 9.78%.

The increase is so fast that it exceeds the expectations of many people who call the bull market every day. DFund partner Yang Linyuan said, "From a technical point of view, we think that $6,200 is a very difficult point, because there are a lot of selling pressures around this point, but I don't think there is no callback. It is like a broken bamboo that has risen to 8,000 dollars."

Everyone wants to know, what is the real reason behind the big rise in bitcoin? Some people are eager to move before the upswing, forgetting the tragic situation when bitcoin prices fell last year.

Reason 1: USDT crisis, BTC becomes a safe haven choice

It is not difficult to find out that the bitcoin price timeline has originated from the USDT crisis.

The USDT is a "stabilized currency" issued by Tether, and Tether promises to have $1 in a bank for every USDT issued. Users can convert the French currency into USDT to trade on the exchange. USDT becomes a better benchmark than Bitcoin, and it also becomes a good value-preserving token. Its market share in the stable currency field is close to 90%.

Tether's parent company is called iFinex Inc., except for Tether, which also runs an exchange called Bitfinex. Bitfinex is the world's fifth-ranked exchange and the world's largest dollar BTC trading platform. In this way, the entire encryption world is linked to the dollar world by Finex Inc.

However, at 4:15 pm local time on April 25, the New York State prosecutor brought Tether and its parent company iFinex Inc. and Bitfinex to court. The indictment stated that under the actual controller of iFinex Inc.:

· USDT issuer Tether's affiliates – crypted exchanges Bitfinex customers and businesses with $850 million in funds were frozen, resulting in customers being unable to withdraw cash;

· To make up for the vulnerability, Bitfinex “handled over” Tether’s $850 million;

· Adding USDT as a reserve through Tether.

"This means that the USDT is not 100% accepted, causing everyone to panic about USDT. Many people therefore sell USDT for BTC to hedge, and BTC prices rise." DFund partner Yang Linyuan told the Finance.

Subsequently, Bitfinex launched a solution to the crisis – issuing a $1 billion LEO for IEO (the first transaction, which means issuing the token at the core of the exchange; the token skipping the ICO, directly on the exchange), The funds raised by the IEO were used as the working capital during the period of “the US government froze $850 million”.

It is worth noting that all LEOs were subscribed with USDT, and it took only 10 days for Bitfinex to complete the subscription. "A large number of USDTs have been frozen on this, so they have pushed up the BTC's further rise."

The founder of the hpool mine pool expressed similar views. He said: In the trading ecology of digital currency before 94, the stable currency was the legal currency, but after 94, the legal currency was one size fits all, there is no substitute, and the bitcoin became the digital currency. The legal currency used to trade various altcoins. Therefore, after 94, Bitcoin rose sharply, but with the introduction of USDT, USDT replaced the French currency in the digital currency. Instead, the demand for Bitcoin was not so strong. This time the USDT accident, it is obvious that many funds choose to hedge back to the bit. currency.

But the USDT is just a prelude.

Reason 2: Geopolitics, stock market plunging

Geopolitical factors have become a very important incentive for this round of soaring.

“From a technical perspective, $6,200 is a difficult point, and there are a lot of sets at this point.” DFund partner Yang Linyuan said that this means that when the price of the currency exceeds $6,200, there will be a large-scale sell-off. Callback.

But the fact is that bitcoin did not appear to be a callback, but it was like a broken bamboo. It quickly broke through the $7,000 and $8,000 mark. "There are not so many sets of hard disk after 7000."

In the view of DFund partner Yang Linyuan, this is mainly due to the friction between the two largest economies in the world, which directly led to the stock market crash.

On May 14, the Nasdaq hit its biggest one-day drop since 2019. The S&P 500 closed down 69.53 points, or 2.41%. The Dow Jones Industrial Average closed down 617.38 points, down 2.38%. The Nasdaq Composite Index closed down 269.92. Point, a decrease of 3.41%.

At this time, digital gold bitcoin has become the best choice. Bitcoin has some similar value scales to gold. These values ​​make bitcoin stored value better than legal currency, and liquidity is better than gold. "Compared to gold, bitcoin It is a better safe haven choice." DFund partner Yang Linyuan said, "Whether any economy is in turmoil, there will be large-scale buying and rising currency prices, and this time it is the world's two largest economies, the impact is even greater."

In fact, in some countries and even major political events in the world, Bitcoin does show the attributes of safe-haven assets.

In April 2013, the “Cyprus Incident” broke out, and Bitcoin soared from more than 30 US dollars to 265 US dollars in just a few days. In June 2016, the UK successfully voted for “Brexit” news, and the price of bitcoin instantly rose from around $550 to $650.

"The rise and disintegration of the entire bubble, and the geopolitical tension and relaxation are resonant," Bitcoin senior investor night cat (net name btcnightcat) said in an interview with Babbitt in 2018.

Lars Seier Christensen, former CEO of Saxo Bank and founder of Concordium, who successfully profited from bitcoin transactions, pointed out: "There seems to be a correlation between the trade headwind and the rise in bitcoin prices. Obviously, some investors are out of worries. Buy Bitcoin."

However, some people disagree with this view. Xu Kun, vice president of OK strategy, said that the Sino-US friction upgrade has indeed accelerated the increase and speed of BTC, and is also the main factor for a rapid breakthrough of 8,000 US dollars, but it is not the root cause of the overall market.

Reason 3: The mainstream market recognizes that it is more favorable

In her view, since the beginning of this year, the market has entered a recovery period, and the fundamentals are good.

At the end of January, Boerse Stuttgart, Germany's second-largest stock exchange, announced that it has officially launched Bison, a cryptocurrency trading application, which will be available in digital currencies such as BTC, XRP, ETH and LTC.

In March, according to Bloomberg and the New York Times, Facebook is developing a new cryptocurrency that can be used for global payments. At the same time, many Internet organizations and financial institutions such as JP Morgan and Fidelity Investment are accelerating the layout of custody transactions for virtual digital currencies.

In May, Kelly Loeffler, CEO of Bakkt (the cryptocurrency trading platform developed by the NYSE's parent company Intercontinental Exchange), said on the medium blog that Bakkt is "closely working" with the US Commodity Futures Trading Commission (CFTC) and will launch in the summer. Test bitcoin futures contracts.

This shows that mainstream institutions are completing the layout of the market. This is in the view of Yu Jianing, the president of the University of Fire Co., which is one of the core reasons for the rise in the price of this round. He said that due to the maturity of blockchain technology, the value of decentralized digital assets represented by Bitcoin is increasingly recognized. "At present, in the United States, relevant policies and laws are also improving, and regulations are becoming clearer. Mainstream institutions including large financial institutions and Internet companies are also beginning to enter."

From the data point of view, the improvement of the law has somewhat eased the concerns of investors. According to a recent survey by Fidelity Investments, more than 50% of US institutional investors currently believe that digital assets can play a role in their portfolios, and 22% of institutional investors already have some form of digital currency.

In the view of Xu Kun, vice president of OK strategy, from the recent BTC capital flow inflow, USD has a major part, and the high probability is that overseas funds are admitted. It can be seen that this round is a professional operation team with a relatively large amount of funds. Large, and with the cooperation of the exchange, in order to promote the market in a short period of time.

In addition, another good news is that the Consensus Conference (the Consensus Conference) will be held from May 13th to May 15th. The conference was organized by the famous blockchain media and research company Coindesk. The conference was held for the first time in 2015. After the Consensus conference in 2015-2017, the price of Bitcoin and other cryptocurrencies will rise. Therefore, Consensus is also considered to be one of the important indicators of the cryptocurrency industry.

Beneficially, bitcoin ushered in the recognition of mainstream institutions, which may be another factor driving the rise of Bitcoin.

Four surges

Looking back at the history of Bitcoin, it has seen four surges and four plunge.

In mid-2011, Bitcoin saw its first surge, and its price rose from $0.95 to $32 in just two months. For the first time, Bitcoin became a myth of wealth. The pioneers of the currency circle, Li Xiaolai and Yang Linke, entered the market at this time.

At that time, Bitcoin and the British pound exchange trading platform went online. At the same time, some mainstream newspapers in the United States began to report bitcoin. As soon as the news came out, global investors rushed to join the ranks of speculative coins.

However, a few days later, Bitcoin began to fall all the way, and bitcoin had fallen below $10 a month later. In February 2012, Bitcoin had fallen to around $2, with the highest drop of 94%.

Some analysts said that the reason for the plunge was because there were not many Bitcoin players at the time, and the trading depth was not enough. A big sell-off could lead to large fluctuations in the price of the currency.

In 2013, Bitcoin officially ushered in a crazy journey.

At the end of April, the price of Bitcoin rose from around $20 at the beginning of the year to around $260. If the line is stretched again, from the end of 2011 to May 2013, the price of bitcoin has increased by a factor of 1,000.

This round of bull market was firstly caused by the crisis of trust in traditional financial institutions triggered by the debt crisis in Cyprus. Later, in the second half of 2013, some countries in Europe introduced a bitcoin friendly policy stimulus. As a result, more people know about bitcoin, so many speculations. The influx of passengers.

Soon, Bitcoin began its second plunge. According to a price fluctuation chart at the time, after falling for $260 on the Bitcoin station, it fell all the way. In just a few days, it fell below $50, and the lowest was more than 40 dollars, a drop of 80%.

Some analysts said that the plunge was because Bitcoin mining software produced a small bug in an update, which caused Mt.Gox, the largest exchange at that time, to suspend the withdrawal of Bitcoin, and the trader panicked and sold out. .

In fact, with the rise in bitcoin prices, its volatility is more than once thrilling.

In the 7 months after the plunge, in December 2013, the price of Bitcoin was as high as 1,200 US dollars, up by 365% compared with the previous highest price. Even bitcoin players almost sleep at the door of the exchange for the convenience of trading. He directly used the bank card to let the staff of the exchange pay for the card. In that month, he could earn 2 million yuan a day.

Immediately, the five ministries and commissions such as the People's Bank of China issued a Notice on the Prevention of Bitcoin Risk. As soon as the notice came out, the price of domestic bitcoin was smashed from $1,200 to $600 on the same day, and evaporated by 50% a day!

Since then, bitcoin prices have been falling in volatility with bitcoin security issues and regulatory policy reasons caused by the Mentougou incident. Until January 2015, Bitcoin finally stopped falling at $150. The decline was also the longest decline in Bitcoin, with a maximum drop of 87%.

However, soon, Bitcoin ushered in its peak.

In 2016, Bitcoin was first a monkey tree, creating a staggering 160% increase. On January 5, 2017, it was the highest price in history, rising to $1,249 per coin.

Even on September 4th, the People's Bank of China and other seven ministries jointly issued the "Announcement on Preventing the Risk of Subsidy Issuance Financing", which did not prevent bitcoin from rising in the general direction. On December 7, Bitcoin once broke the $19,000 mark, which is the highest price in the history of Bitcoin.

Some analysts said that behind this round of bitcoin inflation is the inflow of Japanese and Korean capital, such as the top 50 digital currency of the currency market, the trading volume of the Korean won is basically more than one-third, and the higher the proportion, the more it rises.

Soon, Bitcoin began a cliff-like fall. Starting in the second half of 2018, Bitcoin fell from the highest point to $3,200, the market value fell by 81%, and other competitors fell by 90%.

This round of plunging, BCH forked war is the fuse, but the root cause is the proliferation of air currency, the currency circle urgently needs to return to rationality.

Confused in the future, don't chase

Looking back at history, it is not difficult to find that the skyrocketing has almost become the norm of Bitcoin. Wang Wen, a veteran of the currency circle, told the Finance and Economics (ID: rancaijing), "In the long run, the recent fluctuations are not awkward, and the old leeks are basically like this."

But this still does not prevent large-scale funds from entering the market. According to CMC data, as of 11:45 on May 15, the total volume of global digital currencies in the past 24 hours was 107.763 billion US dollars, which has exceeded a record high of 100 billion US dollars.

In the last 7 days, the net inflow of funds in the digital currency sector. Even so, the market has not really warmed up. BlockVC founder Xu Yingkai said that BlockVC's sentiment index has shown that the market sentiment has rebounded well in the past two days, but it is still too early to judge whether market sentiment is reversed. “Bitcoin and other digital currencies have been born for only ten years. Many analytical tools and strategies are still unable to be implemented due to lack of data and basic ambiguity. Market sentiment needs further confirmation.” He said, “But the digital assets as a whole, especially Bitcoin is already on the road to recovery."

DFund partner Yang Linyuan told the Finance and Economy, then there will be two possibilities for the trend of Bitcoin: the price of the currency may fluctuate, and after a sharp correction, the small break will rise and break through 10,000 in the year; if it is cloudy, the price of Bitcoin may fall. It is below 6000, but it is more difficult.

A number of respondents told the Finance, and it is expected that bitcoin will rise to $10,000 by the end of this year. But even so, chasing still needs to be cautious.

This begins with the blockchain technology behind Bitcoin.

From the point of view of currency attributes, Bitcoin can be used as a payment method at first, but because the currency price fluctuates too much, and the transaction speed is too slow, it has not developed into a payment instrument.

Specifically, the processing speed of the bitcoin network using blockchain technology is about 7 pens per second, the peak value of Alipay reaches 90,000 pens per second, and the interbank bargaining rate is nearly 70,000 times per second.

Such speed can easily cause serious network congestion and a large number of transaction queues in practical applications, which makes the blockchain unable to land in the scenario of high concurrent services, and even simple payment is a problem – this is the current blockchain technology landing The first big problem.

The second big problem is that many well-known blockchain projects are only at the proof of concept stage.

The so-called proof of concept is actually that the enterprise and the project side work together to add blockchain technology to a certain scene, and then prove whether the blockchain technology can achieve the application effect.

“A company wants to use blockchain, it is not procured, it can be used. The blockchain is a decentralized, distributed system. He is driven by many parties.” Lu Xujun Said. No one wants to change the existing pattern of interests, which means that technology cannot be promoted.

As for when there will be a big breakthrough in technology, no one knows the answer.

Blockchain technology itself is slow, but bitcoin has no value?

Blockchain expert Hong Yining believes that Bitcoin is a digital gold, a function of value storage and payment tools, and a stable currency in the cryptocurrency market. This has not changed and will not change.

Chen Weixing said that in his view, bitcoin is worth the money because many people have a common vision – making bitcoin an anchor for the future digital economy era, a yardstick for measuring different values, equivalent to digital gold.

Liu Chang, director of the Blockchain Economic Research Center of Chongqing Technology and Business University, told the burning of finance and economics that the cryptocurrency will definitely replace the legal currency as the world currency, but the road will have many twists and turns. "Now look at the next 30 years, this world currency is not necessarily bitcoin, BCH is more likely, but it may be a new breed, there is still a long way to go, there are many variables."

At present, it seems that only the “digital gold” function can be added to the value of Bitcoin. But the crux of the matter is that Bitcoin is not as strong as gold. Without the ups and downs of speculators, Bitcoin is now more like a tool for speculation.

It is still prudent to chase up bitcoin. (Fueling Finance)

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