Bitcoin falls to $10,000, is the DeFi bull run over?
Produced | Odaily (ID: o-daily)
Produced | Odaily (ID: o-daily)
After a lapse of 40 days, Bitcoin fell to the $10,000 mark again.
According to the OKEx market, at 7:00 this morning, Bitcoin briefly fell below the 10,000 USD mark, reaching as low as 9,933 USDT, a 24-hour drop of 10%. USDT.
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Market review: all sectors are falling
According to the OKEx market, at 23:00 on September 1, Bitcoin broke through the resistance level of 12,000 USDT again, reaching a maximum of 12,050 USDT. This is also the fourth time in the past two months that Bitcoin has hit this point, and it has a tendency to continue to break through the 2019 high of $14,000.
However, the bulls failed to maintain their strength. Market reversals often come unexpectedly.
Starting from 7 am on September 2, Bitcoin began to decline continuously, falling below key support levels such as the 60-day moving average, the 100-day moving average, and $10,000 in succession; as of 7 am on the 4th, it fell to a minimum of 9933 USDT; in the past 48 hours Inside, the biggest drop was more than 16%.
It is worth noting that the duration of Bitcoin above 10,000 US dollars this time has reached 40 days since July 26, which is the longest in the past two years-the longest duration in 2018 was 30 days, and the longest last year was last year. Lasts up to 35 days.
The decline of Bitcoin has also led to a correction of many mainstream currencies, among which ETH, the leader of the bull market in this round, has the largest decline. In the past 48 hours, ETH once fell from 488 USDT to 372 USDT, with a maximum drop of 23.7%.
As of press time, BTC is back above $10,000, at $10,300; ETH is back above $380, at $386.
In addition to the old mainstream coins, the DeFi market has also started a correction, and many DeFi tokens, including AMPL and CRV, have been directly cut in half. According to DeFiMarketCap data, the entire DeFi market value also fell from US$17.1 billion on September 1 to 15.3 billion, a drop of 10%.
In the past 48 hours, the total market capitalization of the crypto market fell from $394.6 billion to $337.1 billion, a drop of 14.5%.
The violent market fluctuations also caused a large number of users to liquidate their positions. Data from Contract Emperor shows that in the past 24 hours, a total of 67,000 people have become liquidated victims, with a total liquidation of US$1.029 billion on the entire network, which is about one-third of the liquidation volume of the "312 Plunge"; of which BTC liquidation was US$665 million , ETH liquidated 130 million US dollars.
In addition, in the past 3 days, the daily average liquidation was 546 million: on September 2, 589 million liquidated; on September 3, 574 million liquidated; on September 4, 476 million liquidated. Moreover, the liquidation volume of long positions is basically more than 20 times that of short positions.
In terms of the securities market, blockchain concept stocks also performed poorly.
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This round of decline may be related to these three things
A good encryption market, why did it suddenly start a big correction?
There is a view in the community that centralized exchanges are fighting against decentralized exchanges, using data to smash the market, trying to collapse the liquidity mining of decentralized exchanges.
This voice is not scientific and lacks evidence.
First of all, the exchanges are not monolithic, and there are conflicts of interest between them. "Unite to fight against decentralized exchanges" is suspected of conspiracy theory; even if a certain exchange has the heart, it is powerless, because the entire market is the Yes, there is no single player that has the opportunity to short the market. Finally, judging from the data, centralized exchanges have not lost too much interest in this DeFi competition, and the BTC reserves of exchanges continue to rise, indicating that classical investors (old leeks, of course, including professional institutions) still favor Centralized exchanges.
Based on the considerations of all parties, Odaily believes that there are three main factors driving the market down:
(1) DeFi speculative cash out
Winning or losing does not matter. The bull market that started in June was born because of DeFi, and it may die because of DeFi.
This decline is inseparable from the speculative cash out of DeFi.
In the past few months, liquidity mining projects have emerged continuously. The basic model is: users deposit coins, give their project tokens as rewards, and users then go to the secondary market to cash out the tokens for arbitrage.
It seems that this model is somewhat similar to traditional finance's "high interest rate storage", but it is different after all. The root cause is:
First, traditional finance can supplement users’ storage income through lending income, but most projects in the currency circle only have deposits and no loans, so they cannot form a stable cash flow, and what users get is only project tokens, which do not have stable value asset.
Second, the value of the original tokens of the liquidity mining project comes from the speculation in the secondary market. Once there is no buying, the price will collapse quickly, and the project will basically die.
Therefore, what we see is basically: big mining players "dig-lift-sell" and cash out; retail investors who cannot participate in mining in the secondary market, under the influence of KOLs and the temptation of huge profits, are willing to be receivers , to provide buying orders for large investors.
In this mode, big players can basically make a steady profit without losing money, and we can also see some big players mining and cashing out 5 million US dollars in 5 days.
There are too many such projects, which will eventually lead to the emptying of the market stock funds, making it difficult to support the continued rise of Bitcoin prices.
It is worth noting that before this decline, the emergence of new DeFi projects SushiSwap and Pearl brought a new wave of carnival to the market, and it was also an unsustainable madness.
(2) US stock market flash crash
At the moment of the epidemic, the global economy is draining water, and Bitcoin and US stocks have also benefited from it, and the tide is rising.
At the same time, Odaily found that the correlation between Bitcoin and US stocks began to strengthen.
Skew data shows that since April, the monthly correlation between Bitcoin and the S&P 500 Index has shown a positive number, which means a positive correlation; on July 7, the monthly correlation reached the highest value of 78.8%, showing a strong positive correlation ; The value subsequently declined, but remained at around 50%.
On September 2, both the Nasdaq Index and the S&P 500 Index hit new highs, closing at 11210.84 points and 3389.78 points respectively.
However, after the US stock market opened last night, they failed to continue their gains. The Nasdaq index and the S&P 500 index fell from their historical highs and suffered the largest decline in several months, falling 4.96% and 3.52% respectively.
Affected by this, Bitcoin, which is highly correlated with US stocks, also began to fall, eventually falling below the $10,000 mark.
(3) Miners sell
In the past 40 days, the price of Bitcoin has remained above $10,000; especially in the past 30 days, the price has been above $11,000.
Sustained high prices mean increased revenue for miners. Therefore, some miners choose to cash out at a high level.
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(Transaction volume inflow and outflow of BTC, picture from Cryptoquant)
Especially a few days before the sharp drop, the net inflow of BTC to exchanges reached a small peak. BTC inflows to exchanges have been peaking since August 28, with the highest recorded inflow of 11,908 on September 1.
ByteTree data shows that miners sold 1,380 bitcoins in the past 24 hours, but the entire network actually produced only 813 BTCs, which means that many miners chose to sell for profit.
ByteTree also kept the miner’s rolling inventory (MRI) at 169.83%, well above 100%. An MRI below 100 usually means miners are selling more than they are mining, while a high MRI indicates they are accumulating more Bitcoin.
Of course, in addition to the above three reasons, today also catches up with a big day: the "94th" anniversary. Every year on this day, some crypto investors feel panic and choose to sell and leave the market.
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Future trend: short-term consolidation, long-term US stock market trend
From the perspective of the entire encryption market, short-term profit taking is gradually withdrawing.
Many big players in the currency circle, including Su Ye, the founder of BlockArk, told Odaily that the current bitcoin has fallen below the psychological price of 10,500, and they have cleared their positions and waited and watched.
Encryption analyst Li Ao told Odialy that BTC may be consolidating around $10,000 in the short term. If it can hold the 100-day moving average ($10,200), it is expected to rebound upwards to the 30-day moving average and $11,000. "The rising pattern has been destroyed, and the market is likely to end. The market needs the next hot spot to stimulate the enthusiasm for participation again. Now it is worth looking forward to ETH2.0."
In addition, the future trend of the encryption market is a very important factor affecting the US stock market.
As of August 29, the number of initial jobless claims for the week was 881,000, better than expected, the lowest level since the outbreak of the epidemic at the beginning of this year, but still well above the peak of 665,000 in early 2009 during the last recession. The economic situation remains grim.
Under the epidemic, it is not clear whether the decline in US stocks is just a short-term correction or the end of the bull market.
If the U.S. stock market fails to maintain its previous strong trend and starts a larger cycle of decline, the encryption market will not be spared.
