Trillion dollars went up in smoke in two hours, but how can cryptocurrencies be cut in half?

Long-term immersion in global secondary markets reveals that the tech-heavy Nasdaq index hit a relative high a month ago and has begun to dip. And former tech champions like Tesla have rallied more than 30% from their highs. Today it's finally bitcoin's turn.

What was supposed to be an ordinary day was marked in the history of the cryptocurrency industry by a rare plunge. It was also a day to remember and recover.

"The Great 519 Pullback"

On May 19, the crypto industry was devastated. Bitcoin dropped from $43,000 to a low of $29,000, with a sharp drop of $13,000 and a maximum drop of 30% in 24 hours. Such sharp falls are also unusual in the notoriously volatile cryptocurrency industry.

As Bitcoin "crashed", other cryptocurrencies followed suit, with a large number of projects dropping more than 50% and prices halving or even toeing off.

At the height of the rout, between 8pm and 10pm on May 19, Bitcoin briefly fell below $30,000 and Ethereum below $2,000, with major cryptocurrencies falling between 30% and 60%. At one point, the overall cryptocurrency market was worth less than $1.6 trillion, according to Coingecko, and just a few days ago, when Bitcoin was worth $62,000, the total cryptocurrency market value exceeded $2.5 trillion.

Trillions of dollars evaporated in a matter of days.

The fierce drop triggered panic among all investors, and the high concurrency of stop-loss liquidation tested the trading platform's ability. However, even Coinbase, the largest cryptocurrency trading platform in the US that just went public, also suffered a brief outage, while Coinbase's stock also plunged 12% to a new record low after the opening.

According to Coin data, in 24 hours, more than 500,000 people in the cryptocurrency market blew their positions, with a total amount of 6.4 billion dollars, about 41.1 billion yuan, which is the largest single day in history. On March 12, 2020, a 50% drop in bitcoin in a single day, known to the industry as "312," resulted in a 22 billion yuan imploded position, which was the highest amount in history at the time, and "519" set a new record a year later.

In addition to the secondary market, outliers also appeared in the data on the blockchain chain. The Ethereum chain was again congested, with the on-chain transfer fee GAS soaring to 1000 Gwei again, close to a historical high, and Binance, the world's largest cryptocurrency trading platform, also temporarily suspended the withdrawal of tokens on the Ethereum chain due to the congestion.

A few hours later, Bitcoin stabilized and climbed back above $40,000. But for those 500,000, they have lost their principal to continue fighting. As investors responded to Tesla founder Elon Musk's Twitter feed.

The "God of Chaos" reappeared amid a market howling, with "diamond hands," the stock market term for "holding firm," suggesting that Tesla would hold on to its more than $1 billion in bitcoin. But this time his tweets were no longer full of applause, as accusations and remorse after the crash brought everything to zero filled the comments section of the world's top KOL who single-handedly guided the cryptocurrency market.

Looking for the cause of the slump

After all, violent fluctuations have their own reasons, if rational discussion, this halved level of volatility has the following reasons.

The first is U.S. stocks.

COINS and U.S. stocks has been following the status of the rhythm in "would you like to do in an empty COINS", explain the relationship between the currency and technology assets, in the second half of last year, the nasdaq's science and technology assets continue to refresh their record high, but the currency before October budged, until October before opening his own bull market.

Now, it can also be seen as following. The Nasdaq has fallen 5% from its peak, and tech asset leader Tesla has retreated more than 30%. The 30% pullback in Bitcoin, the tech asset leader of the blockchain industry, within 24 hours may also be the reason for the trend of the tech bubble bursting.

The second is policy.

Day before the crash occurred, China association of payment and settlement, China's Internet financial association and the China banking association issued a joint announcement, said financial institutions, their institutions and other member units to strengthen the social responsibility, virtual currency shall not be used for the product and service pricing, the insurance business shall not accept insurance related to the virtual currency or virtual currency should be brought into the scope of insurance liability, Shall not directly or indirectly provide customers with other services related to virtual currency, including but not limited to: provide customers with virtual currency registration, trading, clearing, settlement and other services; Accept virtual currency or use virtual currency as a payment and settlement tool; Carry out the exchange service of virtual currency with RMB and foreign currencies; Carry out virtual currency storage, custody, mortgage and other businesses; Issuing financial products related to virtual currencies; Virtual currency as trust, fund and other investment targets.

In April, China CITIC Bank issued a statement that from now on, no institution or individual is allowed to use the account of China CITIC Bank for the transaction fund recharge and withdrawal of Bitcoin and Litecoin, purchase and sell the relevant transaction recharge codes, or transfer the relevant transaction funds through the account of China CITIC Bank. Once found, China CITIC Bank has the right to take measures such as suspending the transactions of relevant accounts or cancelling relevant accounts.

These seemingly unauthoritative but persistent and increasingly frequent policies have also been interpreted by many as a tightening of regulation.

The spread of information such as superimposed "carbon neutral" and mine inspection in some areas, especially the opinion that Bitcoin is a waste of resources and consumption of resources spread among well-known KOLs such as Musk and Bill Gates, led to the escalation of panic among some individuals and overseas institutions, which may also be part of the reason for the pullback.

These are rational discussions. Then, emotionally, it looks like a market repair because the mood on the floor is so high.

Prudent and rational investment

The so-called "zoo market" you must remember, we do not look at the later FOMO project, only to see Dogecoin and Shiba Inu Coin.

There are a lot of good value investments in the industry, and they have made good returns in this bull market. For example, the leading decentralized trading platform UNI, which was once in the top 10 by market capitalization, is already the absolute core of the DEFI space, and has changed the DEFI ecosystem by volume deployment of a centralized trading platform.

But such a project, the market value is not as good as Dogecoin.

Look at the well-known cross-chain leader Cosmos, the new public chain on behalf of Avalanche and so on. These projects at least have ecological applications, teams and users, and now they are not as high as the market value of Shiba Inu Coin.

Compared with the internal cryptocurrency, we look at the technology assets. Dogecoin's market value was once $50 billion, ranking within the top 200 global assets according to Asset Dash statistics. Under Dogecoin, there are top Internet companies such as Airbnb and Uber.

It is hard to find a consistent logic to convince yourself that there is no bubble in the market. Dogecoin, Shiba Inu Coin is only the representative of some projects, is a typical example, these projects are really worth such a high market value?

There will be arguments that this is the value of consensus, or the value of a new way of playing the coin circle. However, there is a certain value. When an asset born from a joke is called out by KOL, it can surpass the market value of the Internet enterprise which is popular all over the world, which is obviously not normal.

From 8 p.m. on May 19 to 1 a.m. on May 20, Bitcoin returned to $40,000. However, from the price point of view, the price of Bitcoin seemed to have only a single-digit decline. However, a cooling of emotions made 500,000 people lose their capital to continue fighting.

Is a bear market next? I don't know, maybe bitcoin will continue to rise, maybe now the bull market is over. But what is needed, in any case, is investor calm.

Highly leveraged, highly hyped assets can make you look better on the books, but only if you walk out alive. In the words of a trader friend, "In a bull market, it's not the winners that matter, it's the leftovers." It's important to stay alive first.

In a strong bull market, only a few people actually make money in the end.

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