|
|
The virtual currency market suddenly experienced a flash crash, with the price of Bitcoin dropping below $65,000 per coin at one point. Many investors stated that the market was showing signs of a bubble.
According to CoinGlass data, after experiencing a significant drop on March 17th, Bitcoin showed a rebound trend on March 18th, fluctuating around $68,000 overall. As of 8:40 PM on March 18th, Bitcoin was trading at $68,502.9, with a 5.2% increase over the past 24 hours.
In just one week from March 11th to March 18th, the price of Bitcoin experienced significant fluctuations. Starting from March 11th, when Bitcoin surpassed the $73,000 mark and approached $74,000, until the 17th, when the price of Bitcoin began to decline.
On March 17th, the virtual currency market suddenly experienced a flash crash, with the price of Bitcoin dropping below $65,000 per coin. According to CoinGlass data, within the last 24 hours, a total of 166,000 investors in the Bitcoin currency market were liquidated, with a total liquidation amount of $565 million.
As a result, the overall cryptocurrency market experienced a significant adjustment. As of the close on the 17th, Bitcoin fell by 3.74% intraday to $66,471, Ethereum fell to $3,567, a 4.25% decrease intraday, and even dropped below $3,500 at one point. Dogecoin fell by 9.61%, with the largest intraday drop exceeding 6%.
It's worth noting that as of the close on the 18th, cryptocurrency prices have rebounded slightly, with Bitcoin at $68,438.7 and Ethereum at $3,554.78.
The main reasons behind the recent rise in Bitcoin are as follows:
Firstly, the issuance of Bitcoin spot ETFs has brought more incremental funds to the market. Data shows that since the beginning of 2024, Bitcoin funds have seen inflows of up to $10.6 billion, driving up the price of Bitcoin spot.
Secondly, bullish sentiments have been fueled by events like the Bitcoin "halving" (i.e., mining rewards halving). It is understood that the Bitcoin "halving" occurs approximately every four years, depending on the block generation speed of the Bitcoin network, reducing the supply of Bitcoin. It is expected that on April 23, 2024, the block reward will decrease from 6.25 (BTC) to 3.125 (BTC). Under the condition of reduced supply, traders have been flocking to the Bitcoin market before the "halving" event in April.
Thirdly, market expectations of a rate cut by the Federal Reserve have also fueled the surge in Bitcoin prices.
Fourthly, the sharp drop in Bitcoin prices has prompted many hopeful but hesitant investors to enter the market. The influx of traders has led to a rebound in the Bitcoin market.
However, whether the cryptocurrency market can reproduce its past glory remains a matter of debate.
According to information obtained by reporters, many investors have remained rational during the surge in Bitcoin. They are concerned about whether Bitcoin will be another bubble and when this bubble might burst.
Currently, there are signs that experts' predictions of "at any time, retail investors should not bet on volatility, let alone leverage trading, otherwise they will inevitably be liquidated" are beginning to materialize.
During the Bitcoin bull market, analysts warned that with the recent surge in Bitcoin prices, short-term market overheating, and a significant increase in leverage ratios, if some funds are profitably sold, resulting in a market downturn, it may lead to greater price volatility and market risks in the short term.
In addition, JPMorgan released a report on Bitcoin, attracting market attention. The report pointed out that the Bitcoin "halving" event (i.e., mining rewards halving) will arrive in April, which may have a severe negative impact on the profitability of Bitcoin miners. The report warned that the price of Bitcoin may plummet to $42,000 per coin, a potential downside of more than 36% from the current price.
Historically, the production cost of Bitcoin has always been the lower limit of its base price. However, JPMorgan analyst Nikolaos Panigirtzoglou predicts that after the halving, the computing power of the Bitcoin network will decrease by 20%, leading to an increase in the estimated production cost and base price of Bitcoin.
The report explains in detail the reasons behind this prediction. Firstly, the halving event will directly reduce the Bitcoin rewards miners receive, thereby reducing their income. Secondly, as the production cost of Bitcoin rises, miners with high electricity costs and low drilling efficiency will face greater pressure. This may lead to some miners exiting the market, further reducing the computing power of the Bitcoin network.
This change is extremely unfavorable for publicly traded Bitcoin miners. JPMorgan pointed out that miners with below-average electricity costs and higher drilling efficiency may survive this change, while miners with higher production costs may face difficulties.
Additionally, the report also mentioned the stock performance of Bitcoin mining companies such as CleanSpark. Although the company has maintained high levels of Bitcoin production and increased Bitcoin reserves before the halving, if block subsidies decrease in the second half of this year, the situation will become even more difficult.
From the forecast in the report, the speculation in the options market that Bitcoin prices would reach $80,000 or even $100,000 per coin may turn out to be unfounded. This means that if retail investors forcibly participate in the Bitcoin market at this time, they are highly likely to be liquidated.
Nevertheless, there are still many investors on Wall Street who are optimistic about the future of Bitcoin. Tony Sycamore, a market analyst at IG, stated that although Bitcoin is overbought in the short term, this trend is far from over, and a drop will be well supported, making a rise to $80,000 not impossible.
Tom Lee, one of the biggest bulls on Wall Street and former chief equity strategist at JPMorgan, stated in an interview, "I believe Bitcoin will return to its long-term trend line in a straight line. In the short term, it may reach $82,000, and it may reach $150,000 by the end of the year." |
|
Post time 29-3-2024 09:33:35