Virtual currency is gradually becoming a reflection of the changing international situation.
After Trump was assassinated, Bitcoin embarked on a soaring trend, even breaking through the $100,000 mark at one point; however, starting this week, Bitcoin entered a high-diving mode. It plummeted from the previous high of $100,000 to the $94,000 mark, with a 24-hour decline of 3.86%.
In fact, not only Bitcoin, but also smaller market-cap virtual currencies like Ethereum, Ripple, Dogecoin, and Cardano saw declines exceeding 10%. The severe volatility also led to a surge in the number of liquidations. According to data disclosed by Coinglass on December 10, over 580,000 liquidations occurred within the last 24 hours, with a total liquidation amount of $1.756 billion, approximately 12.7 billion RMB.
In the years since Bitcoin's birth, we have heard myths of overnight wealth and tragic stories of people feeling they missed out on billions because they lost a USB drive containing their Bitcoin keys. On this planet, there is probably no public market deeper and more capable of reflecting the changing human nature than the cryptocurrency market.
Why did Bitcoin surge this time, and what happened overnight that led to its plunge? Bitcoin's movements are not just a niche game in the currency circle; they are closely tied to global turmoil.
01
The most direct reason for the sharp decline of virtual currency is that Google has recently quietly made a big move.
When the world's attention was focused on OpenAI's continuous press conferences, Google suddenly announced the launch of its latest quantum chip "Willow," achieving a cosmic-level breakthrough in quantum computing. Willow completed a "standard benchmark computation" in less than 5 minutes. In contrast, today's fastest computers need at least 10 septillion (i.e., 10 to the power of 24) years for testing.
When the wave of technology surged, ordinary people might have difficulty feeling it in a short time, but the financial market was certainly the first to see the direction of the tide. Moreover, this chip primarily impacts virtual currency trading.
It should be noted that Bitcoin mining is done by solving complex mathematical problems to confirm transactions and record them on the blockchain. If Bitcoin mining were conducted using Google's quantum chip computer, the cost of mining cryptocurrency would undoubtedly drop significantly. Some foreign media communities even discussed that Bitcoin could be fully mined out within three to five years.
We can certainly believe in the utopia of free markets and free currencies, but for currency to become currency, it still needs to have scarce value as support.
Real currency is backed by sovereign value, while virtual currency's backing is actually the high cost of technology and computing power. When Bitcoin's scarcity begins to dissipate due to the cosmic-level growth of computing power, unless Satoshi Nakamoto returns, a price correction is very likely.
02
However, looking at the history of human finance, the true impact of technology as a tool is far smaller than we imagine. In contrast, human nature is always the primary decisive factor.
Looking at it over a slightly longer timeframe, this round of Bitcoin's surge can be traced back to the time around Trump's assassination attempt.
During the 2024 U.S. presidential campaign, Trump's attitude towards cryptocurrency underwent a significant change. He transformed from an initial skeptic into an active supporter, promising to create a friendly regulatory environment for cryptocurrency and proposing the establishment of a national strategic reserve for Bitcoin.
It can be said that the Trump assassination attempt laid the emotional foundation for his campaign and greatly increased the imaginative space for Bitcoin's legitimacy.
02
However, looking at the history of human finance, the true impact of technology as a tool is far smaller than we imagine. In contrast, human nature is always the primary decisive factor.
Looking at it over a slightly longer timeframe, this round of Bitcoin's surge can be traced back to the time around Trump's assassination attempt.
During the 2024 U.S. presidential campaign, Trump's attitude towards cryptocurrency underwent a significant change. He transformed from an initial skeptic into an active supporter, promising to create a friendly regulatory environment for cryptocurrency and proposing the establishment of a national strategic reserve for Bitcoin.
It can be said that the Trump assassination attempt laid the emotional foundation for his campaign and greatly increased the imaginative space for Bitcoin's legitimacy.
This is because in Trump's campaign statements, he also mentioned that he wants to make the United States the "global capital of Bitcoin and digital currency," and his team further solidified this connection after receiving campaign donations in cryptocurrency, sending a positive signal of official recognition for Bitcoin.
Subsequently, the news of Trump's victory directly stimulated the rise in Bitcoin prices, as many investors viewed it as a hedge asset or a tool against potential inflation.
According to relevant data, since Trump was elected President of the United States, investment in U.S. exchange-traded funds (ETFs) directly linked to Bitcoin has attracted nearly $10 billion in inflows, as people bet that Trump's embrace of the cryptocurrency industry would herald a more prosperous market.
Of course, more importantly, there is Elon Musk's influence.
It is well known that Musk is a supporter of cryptocurrency. He not only once set his Dogecoin image as his avatar but is also a heavy enthusiast of pun-based wordplay.
In mid-November 2024, Trump announced that Musk and Vivek Ramaswamy would jointly lead the proposed "Department of Government Efficiency" (abbreviated as "DOGE") after he takes office. It should be noted that DOGE is also an abbreviation for Musk-supported "Dogecoin."
03
And speaking of this, if we turn back to Google's "cosmic-level breakthrough" quantum chip, we will find many interesting aspects.
This revolutionary disruptive innovation has certainly achieved breakthroughs recently, but the layout for developing quantum chips has been a long time coming.
As the CEO of Google, Sundar Pichai has leaned towards supporting the Democratic Party. The amount donated by Google and its parent company Alphabet's employees and their relatives to Harris's team during the U.S. presidential campaign far exceeded that of Trump's team, reflecting the internal support for Harris within Google to some extent.
Trump's victory undoubtedly brought a celebration to Musk and other Silicon Valley newcomers, but it was clearly not the outcome the old money in Silicon Valley wanted to see.
Of course, to say that the birth of the quantum chip is aimed at Bitcoin would be too narrow. According to Hartmut Neven, the founder and head of Google's Quantum AI, its emergence "provides credible support for the perspective of quantum computing in multiple parallel universes, which aligns with the theory that we live in a multiverse."
However, the verification of parallel universes is indeed too distant. For the vast majority of humanity, it is more worth noting that this technology will have a huge impact on Bitcoin's value at present.
Objectively speaking, Bitcoin's earlier breakthrough of $100,000 was already a very typical instance of "irrational exuberance," and as the stimulus effects brought by Trump's administration slowly faded, this round of Bitcoin's sharp decline was a reorganization and price reassessment of virtual currency after reaching a high.
In the long run, whether virtual cryptocurrencies represented by Bitcoin have value is not something Bitcoin itself can determine, because the essence of currency value is determined solely by scarcity. Gold is like this, currency backed by sovereignty is like this, and Bitcoin has not been able to escape this logic.
Only when humanity believes in its scarcity does it possess irreplaceable value. Currency has never just been a tool for transactions; it is the most concentrated embodiment of human desire and power—even virtual cryptocurrencies are no exception. From this perspective, Bitcoin is far from being able to bear Hayek's utopian imagination of monetary freedom from many years ago.