Bitcoin fell below $10,000, and 7 billion yuan of assets were liquidated across the network. Is it the market makers who are dumping the market or is it the new type of mining that is sucking blood?

After a three-month bull run, Bitcoin fell below $10,000.

According to the Coinmarketcap website, in the early morning of September 3, Bitcoin plunged more than 10% in the short term, falling below the $10,000 mark at one point, and fell to $9,960 at its lowest point, setting a new low since July 27. The 24-hour decline was 9.98%, and it has now rebounded to $10,302. At the same time, cryptocurrencies fell collectively, and most of the top ten popular currencies by market value, except for stablecoins, fell by more than 10%.

Affected by the decline in cryptocurrency prices, data from Hetongdi this morning showed that the amount of liquidation across the entire network in the past 24 hours exceeded US$1 billion, or about RMB 7 billion.

However, due to the special date of the Bitcoin drop and the fact that the price had fallen in the previous two days, some industry insiders said: "Perhaps this is a good show prepared by the main force to commemorate the 94 incident in advance." It is reported that the 94 incident in the currency circle originated from September 4, 2017, when seven ministries and commissions jointly issued the "Notice on Preventing Risks in Token Issuance and Financing", officially stopping ICO (Initial Token Offering) financing. This day is regarded as an important watershed in the history of Chinese digital currency speculation.

However, it is not a tradition in the cryptocurrency circle that prices fall during festivals. Regarding the recent Bitcoin decline, more people believe that Defi (decentralized finance) mining has withdrawn off-market funds, which may be one of the main reasons for this round of decline.

Wu Gang, founder of Bitcoin wallet Bixin, publicly stated on the social platform that the decline of the market was due to the "bloodsucking" of DeFi (decentralized finance) projects, and cited the example of the Sushi project which has skyrocketed a hundredfold in recent times.

Kang Luzhi, a senior researcher at Huobi Research Institute, analyzed to Interface News that the recent hot spot of digital currency is not in the Bitcoin market, but the prosperity of the overall digital currency market caused by the gradual prosperity of the decentralized financial market in the Ethereum ecosystem and the Tron ecosystem.

This is evident from the fact that the transaction volume of decentralized exchanges has reached 6% of that of mainstream exchanges. In addition, the 24-hour transaction volume of the decentralized exchange Uniswap reached US$441 million in early September, surpassing the leading centralized exchange Coinbase Pro for the first time.

"The characteristic of all current decentralized financial projects is that they will lock up a certain amount of liquidity." Kang Luzhi explained that in the short term, the liquidity in the market is attracted by popular projects, and there is a certain liquidity vacuum, which gives short sellers an opportunity, and the resulting decline allows the market to choose a direction.

However, there are also views that the main reason for the decline in Bitcoin this time is still due to the market makers' market slamming.

An analyst KOL named Digital Currency Trend Maniac pointed out that a large number of dumping orders have appeared in exchanges recently. When the price of the currency was around US$11,770-11,800, large traders in the exchange placed orders at US$11,750 in units of 500 BTC to sell the currency. All the orders were eaten up instantly by the arbitrage robots, and about 4,000 coins were dumped.

This operation is similar to the situation of Bitcoin at around $9,400 a month and a half ago, and Bitcoin has since seen a sharp rise. Digital currency trend maniacs believe that the two trading styles are similar and may be the same dealer.

Kang Kang, an analyst at NewBloc Capital, holds a different view. He told Interface News: The sharp drop in Bitcoin in recent days is more related to other global financial assets. From a technical point of view, the U.S. dollar index has shown signs of stopping its decline recently. The stop of the decline in the U.S. dollar index represents the strengthening of the U.S. dollar. The U.S. dollar index is negatively correlated with most global risk assets and safe havens such as U.S. stocks, A shares, gold and silver. The day before yesterday, gold fell by more than 1%, leading to the decline of BTC. Yesterday, the Nasdaq rose and fell, with a daily decline of nearly 5%, and Bitcoin and U.S. stocks have obvious linkage.

Regarding the future trend of Bitcoin, Kang Luzhi, a senior researcher at Huobi Research Institute, told Jiemian News that the lack of liquidity in the market has not improved in the short term, so it is still impossible to judge the end of this downward trend. He added that encrypted digital currencies are high-risk investments, so please invest with caution. (Jiemian News)