Virtual currencies plummeted across the board, with more than 258,000 liquidated positions

The butterfly effect appears? Virtual currencies plummeted across the board, with more than 258,000 liquidating positions.

In March 2021, on the Hupu Forum, there was a ridiculous post that tens of thousands of people followed: "Bitcoin or Evergrande, whose bubble is bigger?"

At that time, people might not have expected the debt crisis of Evergrande, China's first real estate company, to come so quickly. The excessively rapid and disorderly expansion combined with excessive financialization has made Evergrande now shaky.

After 6 months, Evergrande and Bitcoin once again have a delicate relationship. The butterfly effect induced by the Evergrande debt crisis seems to have become an important incentive for the sharp drop in Bitcoin. On the evening of September 20th, Beijing time, Bitcoin suddenly dropped by nearly 10%, falling below 43,000 U.S. dollars, and the short-term decline reached 4,000 U.S. dollars. Other cryptocurrencies also fell by more than 10%. The prices of mainstream cryptocurrencies reached their lowest level in a week. , As of the posting, Bitcoin is quoted at $43,961.91.

Bloomberg said in an article that Evergrande’s debt crisis may spread and spread to the global market has triggered widespread selling, and cryptocurrency prices have also experienced a plunge. Indirectly pointed out that "the selling panic triggered by the Evergrande debt crisis caused the crypto market to plummet."

This reporter noticed that the pre-market panic index VIX of U.S. stocks rose sharply to 40%, while European stocks fell nearly 3%. Encryption concept stocks including Yibang International, Canaan Technology, Bit Mining and Bitcoin Digital all fell more than 9%. Bitcoin also experienced a sharp drop of more than 9% at one time, and most other cryptocurrencies fell by more than 10%. It seems that there has been a consistency panic in the capital market.

Crypto industry analyst Penny told reporters: "The poor market performance in the past two days is due to a variety of factors. The Evergrande debt crisis is just an incentive. This week ushered in the'Super Central Bank Week' or a deeper reason. September 21 On the 22nd, the Federal Reserve’s September FOMC meeting was held. During the meeting, the Federal Reserve will release the latest economic forecasts and interest rate hikes. In addition to the United States, the central banks of Switzerland, South Africa, Japan, the United Kingdom, Turkey, Norway and Sweden will also be present at the meeting. Interest rate adjustments will be announced this week, and it is expected that many countries will see substantial interest rate hikes."

"The market is complicated, coupled with a slight fall in the US CPI in August, inflationary pressures in many European countries have escalated, US and European stocks have performed poorly, and the backlog of market sentiment has caused panic. In addition, higher US dollar and US Treasury yields have an impact on gold. Formed suppression, Bitcoin and gold market trends have always been directly proportional to the overall trend of the above-mentioned reasons, or can explain to a certain extent the decline of Bitcoin this time." Penny further explained.

At present, the overall pessimism in the global capital market is heating up. Before the Fed FOMC meeting, US stocks, European stocks, and Hong Kong stocks fell sharply. The four major stock indexes fell before the market. The Dow fluctuated more than -650 points. The decline in Bitcoin was the overall market sentiment. drive.

Penny pointed out that the US dollar index has skyrocketed for three consecutive days, and the currency tightening seems to be on the line. Developments such as the Fed’s QE plan and U.S. debt issues will cause large fluctuations in the crypto market. After all, the crypto market is small in size and is still affected by the sentiment of the global capital market.

Fundstrat research director Tom Lee said that both institutional investors and retail investors are more willing to hold cash assets with lower realisation friction. This time, Bitcoin's decline began with the risk aversion in the Asian market, where investors are more willing to hold real estate and cryptocurrency assets than stocks.

Jiang Jinze, director of the Muse Research Institute, gave the same view. He analyzed to our reporter that the reasons for the market collapse are complicated. Even culture. Other uncertainties and concerns include: the Federal Reserve may hint at Thursday’s meeting that Taper is on track during the year; Biden’s $3.5 trillion spending plan may be postponed until next year’s approval; Congress has reached a deadlock on the debt ceiling; The Democratic Party announced the biggest tax increase proposal in recent years; the SEC believes that cryptocurrencies are in chaos and are working overtime to formulate regulatory rules and other reasons.

According to data from the Bitcoin Home Network, the sharp drop in Bitcoin caused the entire network to liquidate more than $1.357 billion in 24 hours, and the number of liquidators exceeded 258,000, which became the largest single-day liquidation data since the collapse of the crypto market on September 7.