One day in the currency market and one year in the stock market. Participants in the currency circle have long been accustomed to seeing sharp rises and falls. However, this time they felt a little panic. Bitcoin has fallen by more than 60% this year, and Ethereum has evaporated by 70%. Together with various other digital currencies, the market value is in an uproar. The currency circle may usher in a "Lehman crisis" of storm.
Many countries, led by the United States, are implementing radical austerity policies in order to combat inflation. In the absence of liquidity in risky assets such as stocks and cryptocurrencies, investors seem to have nowhere to escape. In early May, Luna coin, known as the "Moutai" in the currency circle, was the first to suffer a thunderstorm, plummeting from US$90 to almost "zero" in a few days.
There is a saying that if you see a cockroach during the day, it means there is a swarm hiding in the dark place. Immediately afterwards, in order to prevent a run, the "Coin Circle Bank" with assets of 11.8 billion US dollars announced a freeze on withdrawals, causing 1.7 million users to be in trouble. The situation is not settled. In recent years, many fund companies have settled projects. Among them, Three Arrows Capital once purchased 200 million Luna coins and is now facing huge losses. As a result, the crisis in the currency circle gradually evolved from a currency crisis in which liquidity dried up to a bank credit crisis. Financial giants are intricately connected. Once they collapse, it is difficult to escape, which is quite similar to the 2008 Lehman crisis.
However, it may be an exaggeration to say that this was the Lehman crisis. Are there problems with virtual currencies? Yes, the main problem is their lack of practical application scenarios. If the asset lacks a practical use, the collapse can be rapid once the market frenzy subsides. Just like in the antique market a few years ago, old Bodhisattva worth hundreds of thousands dropped to several thousand dollars overnight. Musk gave Dogecoin the power to buy Tesla, aiming to promote the practical application of virtual currencies in daily life.
However, can it be truly applied? In the absence of credit endorsement, it is difficult for virtual currencies to succeed. Why are central banks dissatisfied with virtual currencies? Perhaps it is because creating a new monetary system outside its system may subvert the entire world economic order. Nowadays, with the addition of various trivial digital currencies, the total number has reached thousands. Once it becomes widespread, it will basically be the late stage of bubble.
However, it is precisely because virtual currencies lack practical applications and debt in life that even if they fluctuate violently, they are just cutting leeks and will not cause substantial harm to the overall economy. At present, only people like Musk who hope to build an utopia will frantically save the market and increase their positions as the market falls. However, it is difficult to predict who will ultimately dominate in the future.
