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Macroeconomic factors such as the weak U.S. real estate market and China's economic strategy have affected investor sentiment in the crypto market, causing Bitcoin prices to undergo another correction.
In addition, the cryptocurrency community is concerned that the centralization of Bitcoin miners and whales may lead to short-term market manipulation.
However, despite price fluctuations and technical challenges, experts believe that Bitcoin still has long-term value and is capable of dealing with future risks.
Bitcoin price pulls back sharply, market sentiment turbulent
Bitcoin has seen a price correction in recent days, falling back to $63,853 from its previous high of $64,816. The main reason for this correction may be the impact of macroeconomic data and investors' fear of an economic recession.
Recession fears impact investor sentiment
According to a report by foreign media "Bloomberg", the sales price of new homes in the United States fell by 4.6% in August compared with the same period last year, and the housing inventory is close to a historical high, marking the longest period of price decline since 2009.
At the same time, in order to save the economy, the Central Bank of China has recently launched the largest economic stimulus package since the epidemic. In addition to cutting interest rates, it will also release 1 trillion yuan in loan funds. However, analysts pointed out that these actions were not enough to reverse the economic decline and believed that more fiscal measures should be taken.
Separately, Warren Buffett’s Berkshire Hathaway announced that it will further reduce its stake in Bank of America, as the bank continues to reduce its holdings in less than three months. Holding shares of Bank of America, it recently sold 21.6 million shares for a total price of US$862 million.
After institutions began to enter the Bitcoin market this year, the correlation with traditional finance has become increasingly high. Bitcoin traders are worried that these potential adjustments in traditional finance and the stock market are likely to have a negative impact on the performance of the cryptocurrency market.
U.S. election outcome uncertain, traders take wait-and-see stance
In addition to concerns about a global recession, investors are also paying close attention to the upcoming U.S. presidential election.
Alex Svanevik, CEO of Nansen, a blockchain analysis platform, said that the Democratic Party has created a "relatively hostile environment" for cryptocurrency, and believes that if Harris is elected president, she is likely to continue the current government's encryption policy, which will have a negative impact on the development of the U.S. encryption industry. Not very friendly.
For this reason, most of the Bitcoin community hopes that the Republican candidate, former President Trump, will win the election. After all, after Trump announced his candidacy, he actively created a "pro-cryptocurrency" image. Not only did he issue a personal NFT series, but he also recently went to a Bitcoin bar to buy a burger with cryptocurrency.
However, due to the closeness of the U.S. election results, Bitcoin traders are still adopting a more cautious wait-and-see stance.
Market Manipulation and Centralization Risks: The Impact of Miners and Whales
In addition to the currency price being affected by macroeconomic pressure, the community also expressed concerns about the gradual centralization of the Bitcoin blockchain itself.
According to discussions on the Reddit board, many community members are concerned about the possibility of market manipulation by Bitcoin miners and whales (individuals or institutions that hold large amounts of Bitcoin). In addition, miner centralization is also an issue worthy of concern.
Because Bitcoin must rely on miners to maintain its network security, but if the number of miners gradually decreases and becomes overly concentrated, it may affect the decentralization of the network, making it easier for interested parties to operate.
As the amount of data in the Bitcoin blockchain continues to expand and the number of nodes participating in the network decreases, it is likely that the blockchain must rely more heavily on centralized agency services.
However, Mati Greenspan, founder of Quantum Economics, pointed out that although these giant whales may have an impact on the market in the short term, in the long term, the "invisible hand" of the market will regulate itself.
Because Bitcoin's decentralized design is still an important guarantee for maintaining market stability, investors, whether rich or poor, can freely participate in transactions, which allows the Bitcoin market to maintain transparency.
In addition, although Bitcoin's block size gradually increases, its growth rate is predictable and controlled, thus maintaining the decentralized nature of the network and ensuring that full node operators can continue to support the Bitcoin network.
References: cointelegraph, cointelegraph
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