Ethereum under $400 is rare

The market has plummeted in the past few days, and Bitcoin once fell to $10,000. As of writing, the price of Bitcoin is $10,578, and the price of Ethereum is $390. Tokens have fallen beyond recognition, and this situation has once again made many investors panic.

It happened to be 94 yesterday, so many people associated this sharp drop as whether some kind of force deliberately did evil behind the scenes. One of the more widely circulated sayings is said to come from Bao Erye.

He believes that the rise of this round of DeFi tide will destroy the life of traditional centralized exchanges, and traditional centralized exchanges will never sit still and will definitely find ways to fight back. So what are the countermeasures of centralized exchanges? There are mainly the following:

First, limit everyone’s withdrawal or prevent everyone from withdrawing so quickly.

Second, learn DEX and create your own various mining methods to attract players.

Third, short Ethereum. As long as the foundation of Ethereum is drained, many projects will collapse in an instant.

Let’s not talk about whether the current round of plummet is caused by the black hand of the exchange, but these points of view are reasonable.

Let me analyze with you the logic behind these three points:

Let's look at the first point first: limit withdrawals.The current centralized exchanges actually deposit a large number of digital currencies of users, and exchanges can use these assets to carry out various businesses to earn money, such as lending, shorting, etc. If all the users withdraw their coins, the exchange will lose its accumulated funds, and these channels for making money will be gone, which is equivalent to drawing salaries from the bottom of the exchange.I believe that in exceptional circumstances, this can indeed happen.

The second point: the exchange mines itself. Now all kinds of DeFi projects rely on mining to steal the traffic of centralized exchanges. These methods are very mature and the technology has passed the test of the market. Therefore, centralized exchanges can fully use their original advantages to launch their own mining. project.

And Binance is already doing it. Binance recently launched its own market maker project Liquid Swap.I believe that in the future, major exchanges will start scrambling to grab this piece of cake and deploy mining.

Regarding these three points of shorting Ethereum, it is necessary to have a deeper analysis with you.

At present, many asset synthesis projects such as SNX will mortgage Ethereum to generate various new types of assets, and many mortgage projects such as MakerDAO will also mortgage assets generated by Ethereum (such as DAI).When the price of Ethereum plummets, the mortgager must cover his position in order to keep his mortgaged Ethereum, otherwise, his mortgaged Ethereum will be auctioned, which will cause stampedes and crashes, affecting almost all DeFi assets and tokens.

Therefore, shorting Ethereum is undoubtedly a draw on the entire DeFi.

I think these three points are very reasonable, but not every point will be really used by exchanges to attack DeFi?I don't think so, but it is a good reminder to every investor: We must actively deal with the potential risks and opportunities that these three points may bring us.

Specifically, I think there are two aspects to pay attention to:

The first is not to put too many assets, especially important assets such as Bitcoin and Ethereum, on exchanges, and try to mention them in your own wallet.

The second isIf the price of Ethereum drops sharply and falls below $400, for example, at the moment, we don’t need to worry about whether it is because of shorting, but we must seize this opportunity to restart fixed investment. We must pay attention to long-term value. The price of Ethereum is very low within 400 US dollars. We must seize the opportunity to accumulate Ethereum chips.

So what should we think of this market crash? In my opinion, this is a very healthy callback. This callback may last for a while, and even the prices of various tokens will fall further, but this is to accumulate strength for the next step to continue to rise, so as an ordinary investment As investors, we don’t need to panic at all, but we can take this opportunity to buy coins in the market that we have always been optimistic about but have not bought in the past because the price was too high.