news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

A number of virtual currencies experienced another cliff-like plunge. On August 5, a Beijing Business Daily reporter noticed that Bitcoin once again fell below $50,000, a 15% drop in the day. As of 21:20 Beijing time, the latest price of Bitcoin was $49,835.5.

Ethereum's downward trend is even more severe. Beijing Business Daily reporters noticed that, in line with Bitcoin's trend, Ethereum fell below $2,800, $2,600, and $2,400, reaching a low of $2,200. As of 11:05 on August 5, the latest price of Ethereum was $2,305, down 20.87% on the day, 29.79% on the week, and 25.7% on the month.

Other currencies have not escaped. Among them, the latest price of SOL is $128.5, down 11.66% in 24 hours, 31.26% in the week, and 4.16% in the month. The latest price of Dogecoin is $0.09, down 16.06% in 24 hours, 29.77% in the week, and 16.19% in the month.

The plunge was driven by multiple factors. As many analysts mentioned in an interview with Beijing Business Daily, changes in market expectations are an important factor leading to Bitcoin price fluctuations. On the one hand, the decline in global stock markets and the rise in risk aversion have put pressure on Bitcoin. Even interest rate cuts have failed to boost market confidence, but have further exacerbated market uncertainty. On the other hand, the movement of market funds has also had a significant impact on Bitcoin prices. As prices have fallen and triggered a series of chain liquidations, prices have fallen rapidly.

Along with the plunge, there are also the continuous intensification of the liquidation of the cryptocurrency circle. According to CoinGlass data, at 9:38 on August 5, a total of 200,097 people were liquidated in the last 24 hours, with a total liquidation amount of US$766 million. It is worth mentioning that the liquidation situation is still intensifying with price changes. At 11:16 on August 5, a total of 211,682 people were liquidated in the last 24 hours, with a total liquidation amount of US$820 million. Judging from the liquidation situation, the majority of the people who lost money are investors who are bullish on the market.

It should be noted that high-risk leveraged contract operations themselves involve multiple risks. The so-called contract trading is actually a model of forward trading of trading products. Investors can obtain profits from the rise and fall of the "target" price by buying long or selling short contracts.

For example, when you are bullish on Bitcoin and go long, a rising price will bring profits, while a falling price will bring losses; conversely, when you are bearish on Bitcoin and go short, a rising price will bring losses, while a falling price will bring profits.

Regarding leveraged contract operations, Yu Jianing, co-chairman of the Blockchain Committee of the China Communications Industry Association and honorary chairman of the Hong Kong Blockchain Association, told Beijing Business Daily that this operation further amplified the market volatility risk. Using leverage means that investors can control larger positions with less capital, which increases potential gains but also amplifies potential losses. When market prices fluctuate in an unfavorable direction, investors' losses will multiply, which may eventually lead to a liquidation.

As early as 2020, many departments including the People's Bank of China have issued warnings about the risks of virtual currency trading platforms, pointing out the common routines of virtual currency trading platforms, namely, first defrauding customers through false transactions, and then forcing customers to liquidate their positions by manipulating market prices and malicious downtime. In addition, virtual currencies are also often used for speculation, posing potential risks that threaten financial security and social stability, and have become a payment tool for illegal economic activities such as money laundering.

Yu Jianing pointed out that digital assets are high-risk investment assets. The fluctuation range and speed of asset prices are significantly different from traditional assets. The equity mechanism and technology support behind them are significantly different from traditional investment assets. Participants in the digital asset market must not borrow money for investment, nor use high leverage. It is not recommended to invest in a "all-in" manner, and it is even more not recommended to use working capital from life or business for investment, otherwise it may cause extremely serious consequences.

"Before entering the digital asset market, investors should conduct sufficient knowledge accumulation and risk assessment, avoid making emotional investment decisions due to short-term market fluctuations, and remain calm and rational. Establishing a scientific risk management system is also an important means to protect the interests of investors. Set reasonable stop-loss points and profit-loss ratios, regularly evaluate the risk status of the investment portfolio, and adjust investment strategies in a timely manner according to market changes." Yu Jianing said.

It needs to be clarified that in my country, there are still strict restrictions on the use and trading of encrypted digital assets. Industry insiders remind that in the future, regulators may increase their crackdown on illegal market transactions. Virtual assets are high-risk assets, and any investor should be aware of and pay attention to the risks.

Yu Jianing further reminded that investors should be wary of several major issues. The first is the uncertainty of the regulatory environment. The regulatory policies of countries around the world on digital assets are constantly changing, and new regulatory measures may have a significant impact on the market, leading to sharp price fluctuations. Secondly, the risk of market manipulation is also an issue that cannot be ignored. The digital asset market is susceptible to manipulation by large and institutional investors. Large-scale buying or selling behavior may lead to sharp fluctuations in market prices, and ordinary investors are easily affected.

Beijing Business Daily reporter Liu Sihong