March 9, 2020

 

The U.S. stock market announced its first circuit breaker, and the market plunged again

ETH fell from $210 to $190, a 10% drop

BTC fell from $8,400 to $7,700, a drop of 8%

After two consecutive days of plummeting, the short sellers were having a party and most of them had closed their positions.

 

March 10, 2020 - March 11, 2020

 

The market went sideways. After two consecutive days of sharp declines, many people felt that the risks had passed, and many people even opened long positions.

 

March 12, 2020

 

On the day of the crash, the price of ETH dropped sharply from $1,500 in the bull market to $150. I couldn't help but go all in and open a long position.

99% of the people felt that the opportunity had come and started to go long. Even our air force group, under the leadership of the group leader, joined the ranks of bottom fishing.

Everyone I know in the cryptocurrency world has already opened a long position.

As a result, there was a huge crash that night.

Due to the outbreak of the epidemic, the U.S. stock market ushered in the second circuit breaker

ETH fell from $190 to $120 that day, a drop of 37%.

BTC fell from $8,000 to $5,500 that day, a drop of 31%

 

March 13, 2020

 

Many people who believe in the cryptocurrency world have started to buy at the bottom again.

Some people whose money has not been exposed have started to scrape together and continue to work hard.

Do you think this is over? You are still too naive.

ETH, which had rebounded to $145, suddenly plunged to $87

BTC, which has rebounded to 6230, has now risen to 3790 dollars

Who would have thought that the market, which had already taken away all my wealth last night, would once again experience a 50% plunge the next day?

The price of altcoins dropped dozens of times.

The black swan incident of March 12 remains an indelible painful memory for many people.

 

Due to the impact of the epidemic, the global economic recession, the wave of corporate bankruptcies and the pressure of economic burden have brought unprecedented panic, which has gradually spread to various financial markets and intensified the market liquidity crisis.

Investors are eager to cash out from assets with better liquidity to cover remaining margin and living expenses, and large-scale selling and forced liquidation of highly leveraged positions have further accelerated price fluctuations in cryptocurrencies.

 

However, just yesterday, the stock markets of many countries were once again circuit-breakered, $BTC plummeted by nearly 10,000 points, $ETH fell by 20%, and various copycats were even more miserable. Fortunately, the rise of US stocks in the evening gave the market a shot in the arm. By the morning of August 6, many targets showed an oversold rebound.

Regarding my understanding of this plunge, I think it mainly comes from the following aspects:

1. Impact of the financial environment

2. Insufficient incremental funds

The impact on the financial environment mainly comes from the Bank of Japan's sudden 15 basis point interest rate hike, raising the policy rate to 0.25%. At the same time, the slowdown in the US economy has increased market concerns that the Federal Reserve may postpone its decision to cut interest rates, leading to a weakening of the US dollar, further enhancing the attractiveness of the yen as a safe-haven asset.

As Japan has maintained a low interest rate policy for a long time, the yen is used by many investors and investment institutions as a carry currency. They borrow and invest in other assets. So when the Bank of Japan unexpectedly raised interest rates last week to further tighten expectations, the surge in the yen triggered a large number of stock sales. Because borrowing yen to buy US stocks is equivalent to adding leverage to the exchange rate pair, as the yen strengthens, the stock gains are not enough to make up for the exchange rate difference, and there will be a large number of stock sales and the sale of assets with good liquidity, that is, the sale of crypto assets such as $BTC & $ETH.

The weakening of incremental funds is reflected in two aspects:

1. ETF funds entering the market slowed down;

2. Large capital outflow

It is obvious that from January to early March, the amount of capital inflow surged. The price of $BTC also rose, from 40,000 to 73,000 USD. With the slowdown of profit-taking and capital inflow, the price of $BTC gradually stabilized between 50,000 and 60,000 USD.

$ETH etf is really hard to describe

The other side of the big sell-off

1. Grayscale reduced its holdings of BTC, from 623K in January to 270K now

2. The ongoing compensation of MT.GOX, the BTC balance of the wallet address has dropped sharply from 140K to 46K

3. German government 50k BTC (US government also sold a lot)

4. Jumpstar reduced its holdings by 20K $eth

5. On-chain loan liquidation

The above factors led to $BTC and $ETH passing the ETF, but they did not show the expected continuous positive and steady growth. Instead, on August 5, they plummeted due to external environment.

 

But after BTC hit $49,000, it quickly rose.

I personally think that the bottom of this round of $BTC is likely to be between 45,000 and 48,000 USD. The reasons are as follows:

1. ETF funds support

2. The average mining cost of US mining companies is 43,000 US dollars

3. The US government’s attitude towards crypto assets has changed

In general, the growth of mainstream crypto assets such as $BTC and $ETH will definitely slow down as their market value grows, but the decline will definitely be smaller than the previous fluctuations. It may also be just a personal feeling.

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