The recent phenomenon of 'dual time zone flash crashes' in the cryptocurrency market highlights the current structural issues in the market. By analyzing trading data and market microstructure in depth, we reveal the underlying mechanisms behind this phenomenon.
First, the flash crash during the Asian trading session is closely related to the region's unique trading ecology. According to Binance data, the Asian region accounts for about 65% of the global cryptocurrency derivatives trading volume, with high leverage trading accounting for over 40%. This high leverage makes the market extremely sensitive to price fluctuations.
Especially in Japan and South Korea, due to local regulatory restrictions, the scale of over-the-counter (OTC) trading is huge, and these decentralized trades often lack effective price discovery mechanisms, making them prone to triggering chain reactions. For example, some Asian OTC traders recently reported that a single large transaction could cause a 5-10% price impact.
Upward trend of AI XBT
Despite the overall market downturn, certain sectors are still rising against the trend, especially the AI agent sector. We have mentioned this sector multiple times in the Blockchain Thinking channel and recommended some assets. For example, AI XBT, as an aggregator of QL's AI agents, has shown a strong upward trend and its market capitalization continues to expand. If you do not have a position, it is recommended to buy at the lower end of the channel.
Other AI sector assets
Another noteworthy asset is VIRTUAL, which continues to create higher highs and lows; although there is no clear upward channel, it also shows a strong trend. It can be appropriate to enter when its price pulls back to support levels.
Strong performance of AI16Z
AI6Z is currently one of the best-performing assets, having surged recently without any significant pullback patterns. If you do not have a position, it is recommended to try to enter during hourly pullbacks, for example around 1U, as it may continue to rise in the future. Recently, there have also been many positive developments.
Lastly, it is worth noting that the US Treasury and the IRS have jointly issued the latest broker explanation, which may have a certain impact on the DeFi field.
The IRS requires 'DeFi brokers' to collect user transaction information.
This regulation is expected to affect 875 DeFi brokers and 2.6 million taxpayers.
It can be confirmed that almost all DeFi projects will need to conduct KYC, unless they are completely unrelated to US business or customers. Moreover, brokers will also need to pay taxes.
Paying taxes is not a big issue, but more importantly, DeFi needs to provide KYC, especially for projects run by Americans or operating in the US.
This means that KYC information will need to be provided when trading on platforms like UniSwap, which may affect liquidity in the cryptocurrency market, especially in DeFi.
If this bill is approved, some small and medium-sized altcoin projects will be most affected, and mainstream coins will also be impacted to some extent, especially those focused on on-chain projects.
This explanation will transition in 2025 and 2026, officially implemented in 2027.
As a result, both the US stock market and the cryptocurrency market fell yesterday, with Bitcoin dropping below $95,000, but there was no panic in the market for the time being.
Because the specific implementation of this bill will be in 2027, and after Trump takes power, the market generally believes that Trump has the ability to withdraw this explanation.
If this bill is ultimately implemented without being halted, it could deal a significant blow to the cryptocurrency industry.
We can focus on whether Trump will withdraw this bill after taking office.
