Why has Bitcoin fallen recently?

To be honest, I may have come into contact with Bitcoin later than many of my peers, but I was one of the quickest to make the decision to devote myself to this industry. I learned from the news that Jet Li's One Foundation was grateful to the enthusiasts who donated Bitcoins. I thought about it for less than ten minutes and immediately decided to put down the 90% completed project and devote myself to this industry that I thought had great prospects. I am a technology expert. Although I am not well-known in the Internet industry, I have operated no less than ten IT projects and have cooperated or established 7 companies. Among them, there are some who have succeeded and some who have failed. The only industry that I have not been involved in is group buying, because I thought from the beginning that group buying has deviated from its original appearance and will not be an industry with a very promising future. But after learning about Bitcoin, I feel that I have found a window, a window that can lead to the palace of ideals, and a road that can change the world. To this day, I still insist on my choice, but apart from its investment and speculative attributes, Bitcoin’s true use value is still rarely reflected in China. After multiple analyses, I personally believe that the downward trend in the short term is irreversible. Below, we list several major factors that have caused the price of Bitcoin to fall:

1. Overly free market-bronze price killer

Bitcoin is born for freedom and lives for freedom. , thus creating a group of Bit fans who are 100% fanatical about pursuing freedom. There was once a clamor for Bitcoin exchanges to decentralize. Everyone has witnessed the unsupervised status of Bitcoin exchanges, and it cannot be solved by oneself, such as permanently anonymous dark banks and disorderly competition among mines. Opportunities, etc., these important factors that are often ignored are actually important drivers of price declines.

Just imagine the early capitalist social system. People had incomparable longing and perseverance. They would sacrifice their lives for freedom and cut off the strings on puppets at all costs, transitioning from feudal socialism to capital. Ism is like people who have been trapped in water for centuries. When they suddenly come out to breathe fresh air, they can no longer tolerate anyone pushing themselves into the water again. As a result, an excessively liberal social system has been formed. The result of excessive freedom is that once someone obtains certain resources and social advantages, he can quickly devour everything around him like a black hole, forming a monopoly and giving birth to an oligarch. They don't care about the life and death of others. Just like a gladiator, if you lose, you have to bear all the consequences; if I win, I can enjoy some honors. But after all, oligarchs are a minority, and society is made up of tens of thousands of ordinary people, so this system made up of people must be unstable and unreasonable. Therefore, modern capitalist society has learned to compromise and learned from the practices of that time. After discovering the many advantages of capitalist society, proper supervision, anti-monopoly laws, and various anti-commercial bribery and other daily laws can effectively delay the outbreak cycle of financial crises.

The reason why so many words are used to describe capitalist society is because Bitcoin has many similarities with it. A brand new financial system that does not rely on a specific institution or person, but relies on all participants. With it, we can eliminate all external influences and guard our wallets. This is a very great idea, but what about the reality? Dark banks holding a large amount of Bitcoin can actually control the price of Bitcoin. From the perspective of the capital market, 1 billion yuan is only a very small amount. For the Bitcoin market, it is enough to control the rise and fall of the price of any exchange, oscillating back and forth, commonly known as "sheeping." No matter how firmly you believe in the value of the Bitcoins in your hands, there are lower-priced Bitcoins for sale on the market that are exactly the same as the ones in your hands. Regardless of whether you participate in them or not, you are being influenced by them and want to achieve the original intention of Bitcoin. , it’s easier said than done to control your own assets! For these bookmakers, they can benefit from ups and downs, because under the trend of rising market prices, they will trade higher during each shock period, and more when the market fluctuates every time they fall. If you fall a little, there will always be only a few people at the top of the pyramid.

After more than a year of communication with players in the industry, I found that those who are still left behind are either deeply trapped or persistent believers. Even if they are trapped, only a few people are doing real things. Now they are left behind. Most of them are pure IT nerds, the kind who will blush whenever they meet and talk. Most of them have no financial experience, and not many have even speculated in stocks. Therefore, in the shock, small businessmen are bound to be injured.

2. Financial pressure - silver price killer

There is another important factor. Like stocks, the cash in circulation is far less than the total value, although several exchanges have not announced it. own number of Bitcoins and total RMB assets, but we can draw one or two conclusions from the data released by mtgox’s collapse. mtgox finally announced cash of 40 million U.S. dollars, and Bitcoin value was 450 million U.S. dollars, reaching an astonishing 1:11. According to personal preliminary understanding , the general comparison of domestic trading platforms is between 1:3 and 1:6, which is slightly better than Mtgox, but it is enough to illustrate the problem. Once the bear market comes, the power of short selling is far greater than the power of long selling.

Although the stock market did not rise significantly last year, many people did make profits from the stock market, and it also attracted many users who were originally swinging between the stock market and Bitcoin. Many professional investment users and deep diversified users who have made profits from Bitcoin have temporarily left the Bitcoin industry for various reasons. The main reason is because they believe that Bitcoin, apart from speculation, is a game played by technical talents. Although this is a misunderstanding, let's think about it from another perspective. If you are an investor outside the IT world, the world's largest trading platform will collapse if you say it will collapse. Bitcoin will be stolen if it is stolen. There is no supervision and no control. People are responsible, what do you think? So the situation today is that the number of Bitcoins has not decreased, but the funds have. Although there have been many foreign benefits during this period, the domestic market has continued to decline. This is an indisputable fact.

The reduction in funds has caused the long position to lose enough motivation. The reason why there has been no plunge is because there are still a group of Bitcoin die-hards. Some of them have devoted themselves to Bitcoin for several years in a row, almost every year. We have to experience a similar plunge in volume, so I still firmly believe that this year will just repeat the market pattern of previous years, and the price will eventually rise; of course, I personally believe that in the long term, the trend of Bitcoin will be upward. But is this time half a year or three to five years? I’m really not sure, because the biggest constant in this world is change. As the saying goes, flowers are similar every year, but people are different every year. Past experience may be different for the present. is not applicable.

3. Domestic Policies - Gold Medal Price Killer

I don’t know if Americans have understood now that it was not Japan, not the United States, and not Europe that decided the price of Bitcoin in 2013. It's China. Made in China once caused headaches for foreigners. Now, they have also realized the power of China's hype. China's real estate speculators are like locusts, starving to death wherever they go. At present, Chinese speculators are also rapidly overdrafting the growth value of Bitcoin. China, which has 80% of the world's transaction volume, has explicitly banned the value of Bitcoin as a medium of exchange. So in China, apart from speculation, there is no reality. It’s valuable.

I believe that the world’s understanding of the power of Chinese speculators in Bitcoin began with the documents of the five ministries and commissions, because before this, almost no institution participated in the international Bitcoin conference. After that, many Foreign media swarmed in, both professional and unprofessional media came. As of this time, although the authenticity of the document on April 15 has not yet been determined, the Financial Times interviewed our China Bitcoin Network in advance. It can be seen that they are aware of the power of Chinese speculators.

Why is an Internet product that originated abroad so affected by China's policies? This is not its main application place. This also reflects that the current price of Bitcoin is seriously out of touch with it. The actual value line has been artificially raised, overdrafting its value. Personally, I think that without CCTV's reports and China's participation, the price of Bitcoin would have been over a thousand last year, which would have been pretty good. It was precisely because of the excessive attention it received that the five ministries and commissions issued the document the fastest in history.

4. Crazy Mining Machines - The Ultimate Price Killer

The computing power of Bitcoin mining machines has increased from 1p at the end of last year to more than 30p now in less than 5 months. time, the price has dropped from 6,000 to today's 2,700. The chip computing power of these mining machines has only increased by a few times. In other words, the number of mining machines has increased dozens of times. Among them, the mining machines range from CPU to motherboard, power supply, The chassis box and processing fees are all paid in RMB. Just imagine how much cash flow the mining machine has drained from the entire Bitcoin ecological chain. Once this cash flows into the hands of TSMC, motherboard factories and others, it will Won't come back either. This is also the result of disorderly competition. Once it is profitable, the quantity will never end! It is said that Shenzhen has produced 90% of the world's computing power mining machines, and each chip tape-out costs as little as three to five million and as much as two or three. Ten million, let alone the entire machine. A mining machine manufacturer I met at a club in Shenzhen said that he sold 1,000 USB mining machines in one minute. The madness is evident.

In summary, all aspects have put pressure on cash flow, so the continued decline of Bitcoin in the short term is caused by many reasons. Even without the 4.15 document, I personally believe that a continuous decline process is It will be formed. As for where the bottom is, it depends on the beliefs of those who still stick to it, when the crazy mining machines will no longer be sustainable, and the development status of the actual application of Bitcoin in foreign countries.

Those who have played stocks in 2008 may find that the price trends of Bitcoin and stocks are surprisingly similar. Before it rises from 2000 points to 5300 points, any good news, even if it is an additional issuance, will make Bitcoin Stocks have been rising sharply. After that, although the stock reached its highest point, the downward trend was like a "defeat like a mountain". Any bad news would cause a decline. Coupled with the excessive issuance of new shares, the market's cash was severely overdrawn, causing A shares to fall back to 1,600 points. Although it rebounded to more than 3,000 points, it will still jump to around 2,000 points, and it has fluctuated for several years without improving.

Bitcoin’s market is small, and it is easier to rise and fall. However, if retail investors are too injured, Bitcoin diehards will only be powerless if they want Bitcoin to rise. The bankers’ false rise will face serious problems. There is a lot of market capital pressure, so we can only go with the trend.

At present, there are several companies in the entire industry that can support short selling. Huobi.com, China Bitcoin Network (chbtc), okcoin, etc. can all support short selling of Bitcoin, which also intensifies the deduction process.

Of course, I personally still hold a very optimistic attitude towards the long-term development of Bitcoin, but I really can’t see how to break the current deadlock. The purpose of writing this article is to provide some personal insights for the general public. Maybe everyone is more in-depth and complete than I thought, but finance is nothing more than these things. Good funds are an unchanging rule.