A terrifying night: 13 billion liquidation, SUSHI was cut in half, and EOS price hit a six-month low

At around 6:15 am on December 24, a bloody scene once again took place in the cryptocurrency circle.

The contract market was in a bloodbath, with more than 13 billion yuan of funds liquidated and 110,000 cryptocurrency holders affected.

This decline started yesterday when Ripple was investigated by the SEC and has continued until now. At present, the price of Bitcoin has hardly fallen, but the price of DeFi token SUSHI was halved in 5 minutes, XRP plummeted 40% from yesterday to now, EOS hit a six-month low, and LINK also experienced a flash crash.

The crash occurred in the early morning, and it is still unknown where the crash force came from. However, if we look for reasons for this crash, there are many possible reasons.

SECX investigates Ripple

On December 23, the U.S. Securities and Exchange Commission announced today that it had filed a lawsuit against Ripple Labs Inc. and its two executives (Ripple CEO Brad Garlinghouse and co-founder Chris Larsen), claiming that they raised more than $1.3 billion through unregistered continuous digital asset securities offerings. This move caused XRP to plummet by more than 40% in one day, indirectly collapsing the entire market.

FinCEN's Proposed Crypto Wallet Rules Could Hit DeFi

CoinDesk published an article stating that the proposed crypto wallet rules of the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) have the greatest and most unclear impact on DeFi projects. On the one hand, many DeFi projects rely on smart contracts to store or host funds. For example, users interact with Compound by connecting their MetaMask wallet to a lending platform. Subsequent transactions are reflected in the wallet itself and are held by the only user. On the other hand, these smart contract-driven platforms have no physical addresses and do not necessarily operate under the auspices of actual companies. It is unclear how such DeFi platforms will be handled under FinCEN's proposed rules.

US President's Working Group on Financial Markets Considers Restrictions on Multi-Currency Stablecoins

The U.S. President's Working Group on Financial Markets released a new statement today on stablecoin regulatory considerations, including the possibility of restrictions on "multi-currency stablecoins." The report said that stablecoin issuers should be able to comply with sanctions obligations and be able to conduct one-to-one redemptions. The working group's statement also suggested that stablecoins could pose a threat to "international monetary stability" and recommended actions so that "stablecoins do not undermine confidence in and ability to exercise national fiat currencies."

Grayscale stops new fund purchases

On Monday, Grayscale announced that its Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, and Grayscale Digital Large Cap Fund are currently not accepting new investors. However, Grayscale is still able to obtain additional capital from existing investors despite the temporary closure to new investors. Since Monday, Grayscale has continued to increase its holdings of Bitcoin. Yesterday, Grayscale also increased its holdings of 8,703 Bitcoins, with a total holding of 597,000 Bitcoins.

According to Wan Hui, founding partner of Primitive Ventures, Grayscale suspends investment twice a year, each time for one month. As long as Grayscale does not run out of remaining funds during this one-month window, the pace of buying should continue.

$2.3 billion worth of Bitcoin options contracts expire this Friday

Skew data shows that more than 100,000 Bitcoin options contracts will expire this Friday, worth about $2.3 billion, the largest amount ever.

Christmas

Tomorrow is Christmas. As the dominant force in the Bitcoin market is abroad, the market will logically take a break as foreigners celebrate the holiday (not necessarily cashing out, but buying should be suspended for a while). The Air Force can take this opportunity to dump the market.

How will the market perform in the future?

Observing the market trends over the past year, we can find that the entire market is severely divided: Bitcoin dances alone, DeFi tokens occasionally perform well, and most mainstream coins and altcoins are almost abandoned.

This differentiated market structure not only occurs in the cryptocurrency circle, but also exists in the U.S. stock market and A-share market.

In the U.S. stock market, AMAGFT (Apple, Microsoft, Amazon, Google, Facebook, Tesla) has seen significant growth this year, and their market capitalization accounts for almost half of the U.S. stock market.

Not to mention A-shares, except for the occasional performance of the chip, pharmaceutical and military industry sectors, the real estate, banking and insurance sectors were suppressed and rubbed to the ground. Only liquor had the last laugh in the entire market.

The reason can probably be summarized as: in an uncertain world, look for certainty . In other words, the strong will always be strong. People are more willing to invest in companies that have been verified by history and the market, and try to avoid companies with uncertainty.

Looking at the cryptocurrency world, the biggest consensus is that the pie is big, and institutions have a strong desire to enter the market and are very willing to work together to expand the market. After all, a big market will bring all kinds of new ways to play. For these institutions, they hardly care about technological innovation, and Bitcoin is just a commodity for trading in their eyes . This can also explain why Ethereum is the largest source of innovation in the cryptocurrency world, but the market value of Ethereum has never caught up with Bitcoin.

(Since the high point in 2017, the BTC market has reached a new high, while ETH has not yet returned to its previous high)

Except for LTC, most mainstream coins and altcoins are hardly bought by institutions. Some scattered fighters occasionally pull in a few coins, but when there is a slight disturbance, it often becomes a game of running fast, and it is difficult to develop a consensus. For example, SUSHI and LINK, which were hyped up this time, are prone to flash crashes once they encounter market fluctuations.

The global situation is still turbulent, and next year is seen by many as the year of the once-in-four-years bull market in the cryptocurrency world. However, judging from the current status quo, it is highly likely that Bitcoin, which is backed by institutions, will hit new highs. Without the involvement of major funds, it is unlikely that mainstream and altcoins will see the same rapid growth as in 2017.