Epic 312 Crash in the Cryptocurrency Circle

On March 12, 2020, a massive price crash occurred in Bitcoin and other cryptocurrency markets. The following is an introduction to this event:

1. Price Crash

- On March 12, 2020, the price of Bitcoin fell sharply from about $7,900 to about $3,600, a drop of more than 50%.

- The market value of the entire cryptocurrency market evaporated a lot of value in a short period of time, of which the market value of Bitcoin decreased by 48% in 24 hours.

2. Cause Analysis

- Macroeconomic Factors: Due to the economic uncertainty caused by the global outbreak of the new coronavirus, investors' interest in risky assets has declined, and funds have flowed to safer safe-haven assets.

- Liquidity crisis: As the stock market and other traditional markets collapsed, investors were in urgent need of cash, which triggered a wave of selling across markets, including the cryptocurrency market.

- Market sentiment: Bitcoin is regarded as a kind of "digital gold", but when its safe-haven properties were questioned, holders began to sell, exacerbating market panic.

- Technical factors: The forced liquidation of leveraged traders and quantitative funds further pushed the price down, and systemic problems on exchanges such as BitMEX (such as the liquidation of arbitrage parties) also played a role in fueling the decline.

- Policy impact: Concerns about regulatory policies at the time may also have affected market sentiment.

3. Impact

- Impact on investors: Many investors suffered heavy losses, especially those who used high leverage and faced the risk of liquidation.

- Impact on miners: The sharp drop in Bitcoin prices made it difficult for some miners to maintain operations because the cost of mining may be higher than the price of Bitcoin.

- Impact on the industry: This incident exposed the vulnerability of the cryptocurrency industry and prompted the industry to re-examine risk management strategies.