Bitcoin’s epic plunge! "People who hang out in the

Sino-Singapore Finance, June 22 (Gong Hongyu) "People who hang out in the currency circle will starve for nine meals in three days." This joke is coming true in the virtual currency investment circle.

Recently, Bitcoin, the world's largest virtual currency, has plummeted, falling below the $18,000 mark on June 19 and hitting its lowest level in two years. Although the currency value rebounded slightly to around US$21,000 on the 21st, it was still far from the peak of US$69,000 in November last year.

Some netizens said that money evaporates faster than water, and virtual currency is just a "mind-dropping game" where people beat drums and pass flowers around. Is this really the case?

Bitcoin price trend in the past month.

The “richest man in China”’s net worth has evaporated by 580 billion yuan

"If you sell a Bitcoin bought at the highest value of $69,000 now, you will lose $49,000 (approximately RMB 320,000), which is enough to buy a Tesla Model 3." Someone exclaimed.

The historical loss rate has caused players to suffer heavy losses, and some people joked that Bitcoin rich people are "returning to poverty overnight." According to the Bloomberg Billionaires Index, seven billionaires related to cryptocurrencies have lost a total of $114 billion from the "highlight" of Bitcoin prices last November to today.

The most obvious person whose net worth has "slimmed down" is Changpeng Zhao, the founder of Binance, the world's largest cryptocurrency exchange, who became the richest Chinese man at the end of last year with a net worth of nearly US$96 billion. Following the collapse of Bitcoin, as of June 15, Zhao Changpeng's net worth has plummeted 89.3% this year, evaporating 85.6 billion US dollars (approximately 580 billion yuan).

As a well-known holder of Bitcoin, Tesla also suffered heavy losses in this market. Data shows that Tesla currently holds 43,200 Bitcoins worth US$968 million, and has lost approximately US$530 million by investing in Bitcoin.

What's more, El Salvador, a country that uses Bitcoin as its legal currency, faces huge financial risks due to the shrinkage of Bitcoin's currency value. The government of El Salvador has previously purchased 2,301 Bitcoins.

Data from nayibtracker.com shows that the total cost of purchasing coins in El Salvador is US$105 million, and the average purchase price is nearly US$46,000 per coin. According to the latest currency price ($20,453.57), the Bitcoin held by El Salvador has lost 55.45%.

Who made cryptocurrency “fall off the altar”?

In fact, it is not only Bitcoin that has experienced a catastrophe, but many cryptocurrencies are not optimistic. For example, Ethereum, the second largest cryptocurrency, fell below $1,000 on June 18, returning to the "three-digit" era, hitting as low as $880. The luna coin, which once had a market value of US$41 billion, has also experienced a plunge in value, with its price falling from nearly US$90 to less than US$0.0001.

Various analysts pointed out that high inflation and interest rate hikes by many central banks have stimulated investors' concerns about economic recession. The demand for safe havens in the financial market has increased, and a large amount of capital has flowed out of the cryptocurrency market such as Bitcoin, leading to a sharp decline in prices recently.

What is even more worrying is that under the haze of capital withdrawal, some investors have recently been unable to withdraw funds from some cryptocurrency exchanges, leading to more severe panic about the liquidity of virtual currencies.

For example, Binance suspended Bitcoin withdrawals for several hours last week, saying it was because some transactions were stuck; Celsius, a cryptocurrency lending giant with 1.7 million users, also announced that it would suspend accounts due to "extreme market conditions" All withdrawals, swaps and transfers between.

So, is Bitcoin, which is as low as freezing point, an opportunity for bargain hunting? Sam Callahan, an analyst at Bitcoin exchange Swan, believes that based on the experience of previous bear markets, Bitcoin may fall by more than 80% from its historical high. This means Bitcoin will fall to $13,800.

In addition, according to historical experience, after a sharp decline in Bitcoin, a large amount of funds often enter the market in an attempt to buy the bottom, but now the flow of funds is the opposite, and these funds are now tending to continue to withdraw from the cryptocurrency market.

However, there are also some senior players who are looking forward to the market returning to stability. For example, Musk issued a message on the 19th to support his long-loved Dogecoin, and the price of Dogecoin also increased by 8%. However, after counting the rebound, Dogecoin still has a cumulative decline of more than 60% year-to-date.

Dogecoin co-founder Jackson Palmer also said in a recent interview that the bottom of the cryptocurrency “house of cards” has “started to collapse.”

Is Bitcoin a fool’s game?

Bitcoin’s sudden plunge in this round has once again questioned the underlying logic of its operation.

Buffett, the “number one opponent” of cryptocurrencies, has said that Bitcoin is not a productive asset and does not produce anything tangible. The encrypted digital asset market that exists in the virtual world is often vulnerable when faced with crises, and any negative event will be amplified.

Buffett also bluntly stated that even if the total price of all Bitcoins in the world was only $25, he would not buy it.

On June 14, Microsoft founder Bill Gates attended an event and stated that the cryptocurrency project was a scam based on the "greater fool theory." That is, as long as you find a stupider person to take over the investor's assets, even if the assets are worthless garbage, the investor can still make money.

There is no doubt that most Bitcoin players enter the market with the idea of ​​​​making money. After all, there are too many myths about "making wealth" in this field. However, the sudden plunge of Bitcoin has once again revealed the huge potential risks in the virtual world.

The Chinese government explicitly bans cryptocurrency trading activities, including Bitcoin. In July 2021, the central bank issued an announcement stating that consumers should increase their risk awareness, not participate in virtual currency trading and speculation activities, not blindly follow the speculative behavior related to virtual currency, and beware of damage to personal property and rights.

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