Bloodbath: Bitcoin plunges again

On April 13, the virtual currency market was in a bloodbath again. The price of Bitcoin once plunged by more than $6,000, from $67,100 to below $61,000. According to CoinGlass data, a total of 296,300 virtual currency positions were liquidated within 24 hours.

According to CoinGlass data, in the past 24 hours, a total of 296,300 people in the virtual currency market were liquidated, with a total liquidation amount of US$920 million. The price of Bitcoin has plunged by nearly US$10,000 in the past two days, from US$71,000 to below US$65,000, and then below US$61,000. As of press time, Bitcoin is trading at US$64,312. In addition, the entire virtual currency sector of Ethereum, Dogecoin, and SOL coin has fallen sharply.

Reasons for the plunge

There are three main reasons for the current mainstream views:

1. One is the uncertainty of the Fed’s interest rate cut. Mainstream institutions are confused. Previously, they speculated on May, June, and July. Now they are not sure. The inflation in the United States is high, and the Fed’s hawkish remarks are...

2. Due to geopolitical reasons, conflict may break out between Iran and Israel at any time, and both are in panic.

3. There may be a risk of large-scale selling by Bitcoin miners in the next two to three months.

If you ask me, it's just that some behind-the-scenes capital dealers are harvesting. The crypto market has been rising for about half a year, and it's time to clean it up. No financial market can keep rising, and of course it won't keep falling. It's normal to rise and fall. Everyone, please pay attention to the risks!

Global markets went crazy yesterday

Not only the crypto market, but the entire global financial market went crazy last night. The price of gold, which had risen epically, started to fall around 23:00 Beijing time, falling nearly $100 from its high point. This should be the largest intraday drop in history.

At the same time, both U.S. crude oil and Brent crude oil also fell, falling by $2 from their highs.

US stocks fell across the board, with declines of more than 1%. The Dow fell 1.24%, the S&P 500 fell 1.46%, and the Nasdaq fell 1.62%. At the same time, Wall Street's "fear index" - VIX - soared to October levels.

First, a report in the Wall Street Journal that "Iran may attack Israel in the next two days" made the global market feel like it was facing a major threat. It also triggered a safe-haven scramble across the market on Friday, prompting traders to sell stocks and buy gold and the US dollar instead.

But in the evening, everything went into a downward trend: the price of gold fell by nearly $100 from its high that day, which should be the largest intraday drop in history; the price of oil also fell by more than 1%; U.S. stocks fell across the board, with declines of more than 1%; and Bitcoin lost a week's gains overnight.

Within one day, the market atmosphere was twice pushed to the point of "collapse". First, "gold, crude oil, and the US dollar" soared on the same day, reflecting the significant impact of the crisis on the market. Then, "gold, crude oil, and US stocks" plummeted (note that the combination of the three markets before and after was different), which made people feel that it was the beginning of a sharp drop.

Since the Federal Reserve launched the interest rate hike cycle in March 2022, it has been working hard to curb market volatility. Now, as people lose the consensus on "expectations of interest rate cuts", the market has also run wild.

First, next Monday will not be peaceful. Just like a ball falling from a high altitude, it will not stop on the ground immediately, but will bounce up and cause secondary disasters. If Iran launches an attack on Israel during the weekend, then on Monday we will see a scene that has not been seen for decades.

Second, panic is returning to the U.S. stock market, with the Chicago Board Options Exchange Volatility Index, commonly known as Vix, breaking through 17 on Friday and closing at its highest level since October last year - indicating that investors are betting on rising turbulence. In addition, according to Bank of America data, U.S. large-cap stocks just recorded the largest single-week outflow of funds since December 2022 in the week ending Wednesday.

Third, the US dollar index has risen to its highest point this year and closed at its lowest point on Friday, with no signs of stopping. If the US dollar continues to rise, it will be a disaster for the whole world.

The financial market is like a wild horse that can run wild and go anywhere.

1. No one knows why gold prices plummeted, just as no one could explain why they soared. The only thing that is certain is that global market volatility will increase significantly because the market has lost consensus on the timing of the Fed's first rate cut. Wall Street has given various answers, including June, July, September, December, or no rate cut this year. "When will the Fed cut interest rates" is like a beacon on the road for the market, and when the light goes out, investors lose their direction. This is like a customer shopping in a mall, and the light suddenly goes out when he is buying something. What follows is definitely panic, and people subconsciously want to escape, but they can't find the exit, which can easily cause a stampede - this is what is happening in the financial market now.

2. The decline of US stocks is different from the past. In the past, the Fed could hint at easing policy, but now the Fed has nothing. This week, several senior Fed officials gave speeches, and they maintained unprecedented unity, saying that they were "not in a hurry to cut interest rates, and it is not time to cut interest rates yet." Now the Fed does not know when to cut interest rates, and they are waiting for guidance from economic data. The current crisis may last at least until April 29.

3. Geopolitical risks complicate the crisis. Financial markets know that Iran could and will attack Israel at any time. Investors are always on high alert. They cannot cope with the sudden change in the Fed's interest rate cut expectations and the risk of war that could break out at any time. It's like a shopping mall that has a power outage and then encounters an earthquake. It's hard for people inside to escape. What needs to be done now is no longer to study what just happened, but to find a place to hide.

This is a profound revolution in the global market.