Bitcoin is always good, why is the price of the currency falling?

March 9th was a day of history, which brought a heavy blow to investors around the world: U.S. stocks suffered a bloodbath, falling by more than 7%, triggering a fusing mechanism that could not be triggered by the 2008 financial crisis; Japanese stock markets plummeted 5%, European stock markets plummeted 4%, and crude oil plummeted 30%, creating a magic reality that oil is cheaper than water.





Bitcoin also failed to escape the clutches of the plunge. The price fell by more than 7% that day, plus the previous decline, and the price returned to pre-liberation overnight.





It is false to say that heartache is not true. As a currency hoarding party, from the end of last year, more than 6,000 US dollars have been fixed to 10,000 US dollars. I thought I could wait for the bull market wind to come. What I did not expect was a tornado. The floating profit in these months was swept away.





Honestly, this wave of decline has been quite precipitous. It turned out that Bitcoin is not related to the traditional financial market. No one would have thought that the black swan, a crude oil, would cause a plunge indirectly. Even more anomalous, before the arrival of "Black Monday", Bitcoin received good news at the national level one after another. The price of the currency did not matter, but it went out of the opposite form. Why?





1. Why does the currency price not rise but fall?





Here are some good news for you: On March 4, India overturned the ban on cryptocurrencies, and the exchange reopened the fiat currency channel. After a lapse of two years, a market with a billion people waved again to Bitcoin.





On March 5, South Korea officially incorporated cryptocurrency transactions into the legal system, which heralded the legalization of cryptocurrency;





On March 7, a French court ruled that Bitcoin is similar to fiat money and a valuable asset.





All are national-level benefits, and it's no wonder that Binance Zhao Changpeng will tweet on Twitter:





"It feels like we won't be hovering around $ 9,000 for too long. What's happening recently is not just announcements, they are radical changes."





Indeed, to put in the first two years, with so many accumulated benefits, Bitcoin is bound to go out of 90-degree increase to pay tribute.





But this time it did not work as expected. Bitcoin dropped from around 9000 on March 4 to 7600. The accumulation of positive benefits brought little rebound. Why? Has the currency price been completely decoupled from the fundamentals? Do people no longer care about the legality and popularity of Bitcoin?





All the reasons boil down to one point: the panic of the financial crisis is spreading.





Is Bitcoin facing the test for the first time?

There are no precise indicators for the coming of the financial crisis, but there are precursors: stock market crash, capital flight, bank credit crisis, government debt and corporate debt climbing, currency depreciation, and central bank interest rate hike. Note that these are not in place at one time, but like dominoes Dominoes happen one after another.





Let's look at it now: the global stock market bubble has plummeted, the first emergency interest rate cut since the Fed's financial crisis, the collapse of commodity crude oil, and the global economy has been affected by the epidemic ... It seems that the drums that have known each other are approaching step by step. Can do the worst.





We always say that Bitcoin is the product of a crisis, and that it has its own "antibody" to resist the financial crisis. Is this really the case?





In fact, strictly speaking, Bitcoin has not yet undergone a complete financial cycle. It was born in November 2008 and did not have actual value until the pizza incident in May 2010. And this is the first time that it has formally faced the crisis as a value asset.





Bitcoin does not have much to do with other traditional financial markets, but this does not mean that it will not be affected by the overall economic situation. If the crisis does come, Bitcoin will not be able to survive on its own, and even bitcoin, which is basically thin, may be more exaggerated than the stock market.





There are three reasons. First, it is impossible for the main market forces to counter the megatrend and violate economic laws. Second, mining is the most important group of Bitcoin and requires a large amount of capital flow to maintain the operation of the mine. Third, everyone is under the crisis. Domino, compared to survival, Bitcoin beliefs are not important.





These three factors will become the direct source of bitcoin selling, and will intensify with the emergence of the financial crisis. But if Bitcoin can pass this level and show excellent anti-fragility, it will surely lead for decades.





3. What should we do then?

A few days ago, Sequoia Capital issued a warning letter to the investee company called "Be Prepared for the Black Swan Epidemic." It recommended that all companies be prepared to experience turbulence. Good cash flow, ready for winter.





Although we are currently not sure whether the current financial crisis is just a temporary landslide in the economy, we can be sure that the global epidemic has not finished and it will take several quarters to determine that the virus has been contained and that the economic downturn has not been months Things. So as a currency investor, what should we do?





1. Prepare for long-term investment. A long time ago, I also felt that the short-term approach of buying on dips and selling on rallies is a wise move to make more money, but in fact no one can step on the changes in the market again and again. Let you pick sesame seeds and lose watermelon.





2. Try not to touch the contract. Since the end of last year, many people have begun to play to join the contract army, but in the end most of them are bamboo baskets to fetch. If you have the confidence to play, formulate a trading strategy, strictly implement it, and be prepared to withstand 3 times 5 times 10 times the pain and despair of ordinary people.





3. Be cautious about bottoming out and only invest in affordable money. 2020 is too magical. The epidemic black swan and crude oil black swan have turned the financial market upside down. No one knows what terrible things will happen next. At the beginning of the year, many big Vs said that Bitcoins below 10,000 are hard to see, but did not want to fall below 9000 and 8000 soon. Once a new crisis comes, you can never imagine what Bitcoin can be smashed in panic . Therefore, seeing the price you want, don't rush to surrender all the chips, it may be better to make a decision with the money you can afford.





Finally, the old saying goes: The person who can survive is not the most powerful or intelligent, but the person who is most adaptable to change. This is true for you, me and Bitcoin.



