If you are immersed in the global secondary market for a long time, you will find that the Nasdaq index, which is dominated by technology assets, has reached a relatively high point a month ago and began to drop. Including former technology leaders like Tesla, they have already pulled back more than 30% from their highs. Today it is finally Bitcoin’s turn.

I thought it was an ordinary day, but because of a rare plunge, it was recorded in the history of the cryptocurrency industry. It is a day worth commemorating and recovering.

“519 Big Callback”

On May 19, the cryptocurrency industry was miserable. Bitcoin dropped from 43,000 US dollars to a minimum of 29,000 US dollars, a sharp drop of 13,000 US dollars, and a 24-hour maximum drop of 30%. Such sharp declines are not common in the cryptocurrency industry, which is known for its high volatility.

With the “crash” of Bitcoin, other cryptocurrencies have followed suit. A large number of projects have fallen by more than 50%, and their prices have been cut in half, even toes.

两个小时万亿美金灰飞烟灭,加密货币为什么能瞬间腰斩?

At the climax of the plunge, that is, between 8 pm and 10 pm on May 19, Bitcoin fell below US$30,000, Ethereum fell below US$2,000, and mainstream cryptocurrencies fell 30%-60%. According to CoinGecko data, the total market value of the overall cryptocurrency market was less than 1.6 trillion US dollars at one time. Just a few days ago, when Bitcoin was 62,000 US dollars, the total cryptocurrency market value exceeded 2.5 trillion US dollars.

In just a few days, trillions of dollars have evaporated.

The ferocious decline caused panic among all investors. The high concurrency of stop loss and liquidation tests also tested the ability of the trading platform. However, even Coinbase, the largest cryptocurrency trading platform in the United States, which was just listed, experienced a brief downtime. The stock COIN also plummeted 12% after the opening, reaching a record low.

The collapse also brought about liquidation. According to the statistics of coin data, in 24 hours, more than 500,000 people in the cryptocurrency market liquidated their positions, with a liquidation volume of 6.4 billion U.S. dollars, or about 41.1 billion yuan, which was the largest liquidation in a single day history. Amount. On March 12, 2020, a day called “312” by the industry, Bitcoin’s single-day drop of 50% brought a liquidation of RMB 22 billion, which was the highest amount in history at the time. One year later, ” 519″ refreshed the record.

In addition to the secondary market, the on-chain data of the blockchain also has abnormal values. Ethereum’s chain is congested again, and the on-chain transfer fee Gas once again soars to 1000 Gwei, which is close to a historical high, and the world’s largest cryptocurrency transaction The platform Binance also temporarily suspended the withdrawal of tokens on the Ethereum chain due to congestion on the chain.

A few hours later, Bitcoin stabilized and rose back to above $40,000. However, for those 500,000 people, they have lost their capital to continue fighting. Just as investors replied under the Twitter of Tesla founder Elon Musk.

两个小时万亿美金灰飞烟灭,加密货币为什么能瞬间腰斩?

The “God of Chaos” appeared again in a market article about howling and howling. Using the term “diamond hand”, which means “firm holding” in the stock market, it is suspected to express that Tesla will firmly hold more than $1 billion in hands. Bitcoin. And this time, there is no more applause in his Twitter replies, because the accusations and regrets after the liquidation caused everything to zero are filled with the world’s top KOL comment area who once guided the cryptocurrency market by himself.

Looking for the cause of the plunge

After all, the violent fluctuations have their own reasons. If you discuss rationally, there are several reasons for the fluctuation of the level of the cut.

The first is US stocks.

Bitcoin and U.S. stocks have always been following the state. Rhythm explained the relationship between Bitcoin and technology assets in “Are you trying to short Bitcoin”. In the second half of last year, Nasdaq’s technology assets continued to refresh their respective history. New highs, but Bitcoin remained intact until October, and did not start its own bull market until after October.

And now, it can actually be seen as following. The Nasdaq index has fallen by 5% from its high point, and the technology asset leader Tesla has also retreated by more than 30%. As the technology asset leader in the blockchain industry, Bitcoin has experienced a 30% correction within 24 hours. There may also be reasons for the bursting of the technology bubble.

The second is policy.

The day before the plunge, the China Payment and Settlement Association, China Internet Finance Association, and China Banking Association issued a joint announcement stating that financial institutions, payment institutions and other member units must earnestly strengthen their social responsibilities and not use virtual currencies to price products and services. , Shall not underwrite insurance business related to virtual currency or include virtual currency in the scope of insurance liability, and shall not directly or indirectly provide customers with other services related to virtual currency, including but not limited to: providing customers with virtual currency registration, transaction, clearing, Settlement and other services; accept virtual currency or use virtual currency as a payment and settlement tool; develop virtual currency exchange services with renminbi and foreign currencies; develop virtual currency storage, custody, mortgage and other businesses; issue financial products related to virtual currency; Currency is used as the investment subject of investment in trusts, funds, etc.

Time is moving forward. In April, CITIC Bank issued a statement that from now on, no institution or individual may use CITIC Bank accounts for Bitcoin, Litecoin, etc. transaction fund recharge and withdrawal, purchase and sales related transaction recharge codes, etc. For activities, it is not allowed to transfer relevant transaction funds through the CITIC Bank account. Once discovered, CITIC Bank has the right to take measures such as suspending relevant account transactions and canceling relevant accounts.

These seemingly not authoritative, but persistent and increasingly frequent policies have also been interpreted by many viewpoints as tightening of regulation.

The spread of information such as “carbon neutrality” and mine inspections in some areas, especially the spread of ideas about Bitcoin’s waste of resources and consumption of resources among well-known KOLs such as Musk and Bill Gates has caused some individuals to interact with each other. The escalation of panic in overseas institutions may also be part of the reason for the correction.

These are all rational discussions. Next, from a perceptual point of view, this seems to be a market repair, because the mood in the market is too high.

Prudent and rational investment

You must remember the so-called “Zoo Quotes”. We don’t look at the later FOMO projects, but only look at Dogecoin and Shiba Inu coins.

There are many targets worthy of value investment in the industry, and they also have a high rate of return in this bull market. For example, the leading decentralized trading platform UNI, whose market value once entered the top ten, is already the absolute core of the DeFi field and changed DeFi. Ecology, transaction volume deployment centralized trading platform.

But for such a project, the market value is not as good as Dogecoin.

Look at the well-known cross-chain leader Cosmos in the industry, the new public chain representative Avalanche, etc. These projects, at least with ecology, applications, teams and users, are not as high as the market value of Shiba Coin.

Instead of comparing with cryptocurrencies, we look at technology assets. The market value of Dogecoin was 50 billion U.S. dollars at one time. According to the Asset Dash statistics, it ranked within the top 200 of global assets. Below Dogecoin, there are Airbnb and Uber. Internet companies.

With these phenomena, it has been difficult to find a self-consistent logic to convince oneself that there is no bubble in the market. Dogecoin and Shiba Dogecoin are just representatives of certain projects, and they are typical examples. Are these projects really worth such a high market value?

There will be opinions that this is the value of consensus, or the value of Amber’s new gameplay. However, there is a degree of value after all. When an asset born from a joke is called by a KOL, it can exceed the market value of Internet companies that are popular around the world. This is obviously not normal.

From the sharp drop at 8 pm on May 19th, Bitcoin returned to $40,000 at 1 am on May 20th. However, from the price point of view, the price of Bitcoin seems to have fallen by only single digits, but a cooling down of sentiment caused 50% Ten thousand people have lost their capital to continue fighting.

Is a bear market next? I don’t know, maybe Bitcoin will continue to rise higher, maybe now the bull market is over. But no matter what, what is needed is the calmness of investors.

Highly leveraged and highly hyped assets can indeed make your books look better and better, but only if you can get out of the battlefield alive. In the words of a trader friend, “In a bull market, the winner is not the most important, the remaining is the most important.” The most important thing is to ensure that you are alive.

In a strong bull market, only a few can really make money in the end.