2021年11月27日

Bitcoin intraday down 12%, multi – factor resonance to the market downtrend

On the occasion of Thanksgiving, Bitcoin staged a “thousand dollar” slump. On the morning of November 26, Bitcoin plunged from a high of $18,913 and fell as low as $17,125, a drop of 9.4%. In the afternoon, Bitcoin continued to fall, falling below $16,500, down nearly 12% on the day and down nearly $2,000 from the day’s high. Ethereum lost $500, down 12.4% on the day. Contract emperor data show that the main trading market in the 24 hours of BTC warehouse burst a total of 8.911 billion yuan.

Some analysts said today’s sharp drop in bitcoin and the broader market was the first significant pullback since the rally began. Bitcoin’s volatility has increased further this year. Since October, Bitcoin has soared, nearly doubling from $10,000 to $19,500. It is only a whisker away from its all-time peak of $19,783 in late 2017. The price of bitcoin has risen nearly fivefold this year from its March low.

For the current market, the institutional personage said to the Securities Times reporter, the market has accumulated a lot of profit disc, the opportunity needed by the short as the United States to the institutions of the regulation of the tougher, found an opportunity, the market has formed a certain resonance. In addition, the study found that many investors are using credit cards or taking out loans to invest in bitcoin, which can be dangerous. At 94, the greed index is also a very dangerous sign.

Multi – factor resonance market downtrend

Fire currency senior analyst Kang Lv told the Securities Times reporter, the pullback has the following reasons.

First, Coinbase stopped customers from making new margin trades, canceled all outstanding limit orders, and ended margin trading entirely next month. Because Coinbase didn’t fully disclose the details of the CFTC’s specific guidance, it wasn’t clear what the compliance boundaries of the future trading market would be, and there was some panic.

In addition, the short bulls were caught off guard by the Thanksgiving holiday, when heavy positions were on holiday. Bitcoin has been rising continuously recently, and the market has accumulated a large number of profiting disc. With the stricter supervision of institutions in the United States, the opportunity needed by short sellers has been found, and the market has formed a certain resonance with the trend, so there has been a relatively large decline.

In addition, the time is approaching the end of the year, the global market is facing the situation of capital gradually tightening, bulls on the incremental capital expectations reduced, so do certain profit taking action.

William, chief researcher at OKEx Research, told the Securities Times that speculative demand is an important factor affecting the price of Bitcoin. COINS as a special kind of asset classes, unlike stocks or bonds, won’t produce any predictable cash flows, investors get return is the only way of currency prices, and, like all risky assets, its price by investor sentiment pendulum and risk attitude change shows the characteristics of cycle changes.

First, bitcoin’s price cycle is strongly correlated with the mood pendulum of investors. Such large fluctuations in the Bitcoin market cannot be explained by fundamental changes in companies, industries and the economy, but are largely due to the pendulum swing of investors’ psychology and emotions. Especially in short cycles, the psychology of investors is like a pendulum, which swings back and forth between optimism and pessimism. The pendulum rarely stays in the middle for very long, swinging back and forth with a movement that reverses from one extreme point to another. Such swings from one extreme to the other are often observed in Bitcoin’s market movements.

Another important factor affecting the price of bitcoin is cyclical changes in investors’ risk attitudes. Assets that look riskier must appear to have a higher risk premium, or no one will want to make them. This is also true of Bitcoin, which, despite its high risk, has attracted a large number of investors due to its potential high yield.

“When the market is going well and the price of Bitcoin is soaring, investors tend to mean the future is bright, risk is a friend, money is easy and everyone feels good; This means that very little risk aversion is priced in, so market prices are fraught with danger; Also, at the bottom of the market, risk tolerance will be low to cannot go any lower, people simply don’t allow any risk, so that investors in such a low price to buy, and loss of impossible, but the tingling is still in the market before fall, investors want to improve risk aversion, only willing to sit there watching, though prices are low, people are reluctant to invest.” William said.

The greed index is already high

Because of these reasons, the price of Bitcoin often rises and falls, and fluctuates wildly. In the last Bitcoin bull market, Williams said, a full Bitcoin bubble cycle was observed. Between November and December 2017, when the price of bitcoin jumped from around $8,000 to a high of $19,000, the market was at its most exuberant.

Based on the current market, the price of bitcoin has jumped from around $10,000 since mid-October to around $19,000 today. A lot of people in the market are very optimistic about bitcoin, they think it will hit $80,000, $100,000 by the end of the year; On the other hand, when researching the market, we found that many investors began to use credit cards or loans to invest in Bitcoin, which is a very dangerous behavior.

According to the Bitcoin Greed Index, it has reached 94, and the market is in a state of extreme greed fever. In particular, historically, the Bitcoin Greed Index has been around 90 since mid-November, which is a pretty dangerous sign.

Therefore, for the future trend of the Bitcoin market, William advised the market to be cautious about investing, and not to actively leverage or invest too much money at one time.

“The lower support could be near the 16000 round mark. Continued monitoring of the position’s support will be required overnight.” The expression of kang lv.

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