The world is currently facing the worst financial crisis in decades, with fears that the recession will last for years. However, this economic instability also plays an important role in pushing Bitcoin and blockchain technology into the mainstream market.
Ratio accept BItcoin will continue to skyrocket
Critics have voiced opposition to the US Federal Reserve's decision to print trillions of dollars to help reduce unemployment rate the growing of the country. This move will undoubtedly cause inflation, which has a tremendous impact on the hundreds of millions of people in less-developed countries that depend on the US dollar as a hedge against weak national fiat money. themselves.
Simply put, for decades, the US dollar has been a reliable currency well beyond the US border. With hegemony at stake, Bitcoin and other cryptocurrencies will appear much more attractive as alternatives. Even before the current crisis, many countries tended to embrace cryptocurrencies. As such, there is reason to fear that a weaker US dollar will only accelerate this process.
This week:
France makes Bitcoin legal money
India lifts you on trading Bitcoin
South Korea legitimize Bitcoin
Australia says Bitcoin is money
German banks can now offer BTC
Bitcoin ATMs pass 7,000 globally#Bitcoin adoption is unstoppable in 2020.- Bloqport (@Bloqport) March 6, 2020
“Week 6/3:
France accredited Bitcoin is legal money
India lifted its ban on Bitcoin transactions
South Korea legalized Bitcoin
Australia admit Bitcoin is money
German banks can now provide BTC
ATM Bitcoin pass numbers 7,000 globally. Can't stop vAcceptance of Bitcoin in 2020”.
The ‘safe shelter’ story develops
The current economic crisis has proved that the current global monetary framework is much weaker than previously imagined. Bitcoin has long offered an alternative, as it allows assets to be kept and used regardless of centralized institutions.
Although Bitcoin's price decline over the past few weeks may have been frustrating for investors, it can be reassuring to know that their money cannot be confiscated or devalued by any central authority. This fact will certainly motivate those who have now lost faith in the legacy financial system to accept Bitcoin. As such, Bitcoin is proving itself to be a very safe option to store asset value.
The blockchain space will merge
Much of the blockchain space has been created from overwhelming altcoins that provide very little utility in the cryptocurrency space. While some alt are useful and promising, many types have no purpose. Now is the time to consolidate the most powerful blockchain platforms.
The collection of the weakest altcoins that are likely to gain prices and are accepted in bulk will benefit Bitcoin and its rivals. It also gives large corporate and institutional investors a clear choice when looking for solid foundations to embrace. This process can be painful for some individual investors and backers, but it will create a much healthier environment for long-term blockchain adoption.
Size and range of leverage Bitcoin industry is the cause flash crash?
Although Bitcoin's lightning incident on March 12 that brought the price back to $ 4,000 has gradually subsided, analysis and review of the biggest day-to-day decline of Bitcoin since 2013 is still taking place.
Although Bitcoin is advertised as an unrelated asset, its price fluctuations in the context of a global pandemic reveal yet another story. OKEx CEO Jay Hao said in an interview:
"DThe COVID-19 pandemic certainly affects all financial markets, including Traditional market and electronic money. Fear of economic recession has caused people to sell out their mobile assets to get money to live on. That's why we see the stock market shock recently, as well as the oil price and cryptocurrency price war.”.
A quick glance at the traditional market as well as the crypto market, both areas recorded a significant decline. However, digging deeper can see that the Bitcoin market actually collapsed even more after the global and economic crisis between COVID-19. Is high leverage trading in the cryptocurrency market one of the key causes?
Source: Coinbase
Coinbase believes that one of the reasons behind flash crash is the scale and scope of leverage in the Bitcoin industry. Cryptocurrency platforms such as BitMEX, Binance offer high leverage options to users, creating opportunities for higher profits when compared to low leveraged positions. However, during times of crisis and severe market conditions, these options can also amplify losses.
At the same time, Coinbase in a post on blog Recently announced that the traditional stock market limits the amount of leverage to nearly 2-3 times. However, the Bitcoin market is not like that, some overseas exchanges offer more than 100 times leverage, according to which, “1 dollar of Bitcoin can be used as collateral to support $ 100 purchasing ability". Specifically:
"To be fair, this is very risky. Ma position have leverage up to 100 times will be closed if the market moves only ~ 1%. So most trader all hold positions at leverage 5 - 30 times more reasonable, but still significantly higher than 2 - 3 times"
In addition, the March 12 panic turned buyers into sellers. And as prices continued to decline, higher leverage positions were forced to close, resulting in more liquidation.
Liquidation on BitMEX
BitMEX offers up to 100 times leverage for BTC / USD perpetual contracts. Bitcoin's collapse triggered liquidation of more than $ 700 million on the Seychelles-based platform, of which the sale was $ 698 million and the liquidation was $ 4 million.
Liquidation on BitMEX | Source: Twitter CarpeNoctom
Over the next few days, the Bitcoin price recovery process stalled and continued to slip after millions of liquidations on BitMEX. In fact, speaking of the mass sell-off of Bitcoin in the second and third weeks of March, Geoff Watts, senior data scientist at the US-based Digital Assets Data, said:
"You can see a lot of leveraged trading in that cryptocurrency market and that leverage will leading to extreme adjustments during periods of high volatility”
You can see the price of Bitcoin here.
Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
Thuy Trang
According to AZCoin News
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