Economic Daily: Speculation on virtual currency will end in vain

"The cryptocurrency market has collapsed" is on the hot search again. Recently, the virtual currency market has suffered a "massacre". First, the LUNA coin, known as the "Moutai of the cryptocurrency market", plummeted by more than 99%. Since May 11, it has fallen from over $30 to around $0.0003 on the evening of May 14, almost to zero. Virtual currencies such as Bitcoin and Ethereum have also plummeted one after another. On May 12, Bitcoin fell from around $32,000 to below $27,000.

Virtual currencies, which have always been touted as "digital gold" and "safe haven assets" by people in the currency circle, have once again proved their high risks and "big bubbles" with practical actions. The plunge is mainly related to the Fed's interest rate hike. The price of virtual currencies is easily affected by liquidity. In a market environment with loose liquidity, speculation is prevalent, pushing up the value of currencies. Once the market environment changes, the market often takes a sharp turn for the worse. Since the beginning of this year, the Fed has started a cycle of interest rate hikes, and global liquidity has tightened. In particular, in early May, the Fed raised interest rates by 50 basis points at one time, which had a negative impact on the capital market and market sentiment, and virtual currencies were the first to bear the brunt.

Virtual currencies are prone to sudden rises and falls. Virtual currencies have no real value support, and their prices are easily manipulated. Changes in regulatory direction, the buying and selling of a few investment giants, etc. can cause sharp fluctuations in the value of the currency, triggering a large-scale sell-off.

With the efforts of our regulatory authorities to build a strong firewall, the transmission of virtual currency risks in China has been effectively blocked. Since last year, the central bank and other departments have introduced a series of measures to prohibit financial institutions from conducting and participating in virtual currency-related businesses, clean up and ban domestic virtual currency trading platforms, and increase the intensity of verification and rectification of "mining", etc., to extinguish the "false fire" of virtual currency speculation in all aspects and install a "protection lock" on investors' wallets. The tragic "bloodbath" of virtual currency this time once again proves that the actions of our regulatory authorities are decisive, powerful, timely and necessary.

It should be emphasized that in my country, virtual currency transactions are not protected by law. In September last year, 10 departments issued the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Transaction Speculation", which clearly stated that any legal person, non-legal person organization or natural person who invests in virtual currency and related derivatives and violates public order and good morals will have the relevant civil legal acts invalid, and the losses caused by them will be borne by themselves; those suspected of disrupting financial order and endangering financial security will be investigated and dealt with by relevant departments in accordance with the law. This means that if investors rashly "enter the circle", they will not only bear their own losses, but also may touch the legal red line.

For an investment target, if there is only speculation and hype but no actual wide application scenarios, there is no development prospect. At present, the plunge is still continuing, and no one knows when this "out-of-control roller coaster" will reach the end. Investors should remain rational, promptly eliminate the greed of bargain hunting and getting rich overnight, and stay away from related trading speculation activities, otherwise it is likely that "the currency will be gone and the money will be gone".