Bitcoin’s Epic Plunge! 580 billion yuan of Chinese richest man is gone

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China News Network

“People are mixed in the currency circle, and they will be hungry nine times in three days.” This ridicule is being fulfilled in the virtual currency investment circle.

Recently, the world’s largest virtual currency, Bitcoin, has plummeted all the way, to below the $18,000 mark on June 19, and to its lowest level in two years. Although the value of the currency on the 21st rebounded slightly to around $21,000, it is still far from the peak of $69,000 in November last year.

Some netizens said that money evaporates faster than water, and virtual currency is a “game of wisdom” that beats drums to pass flowers. Is that so?

Bitcoin price trend in the past month. Data source: Investing.com

“Chinese richest man” has lost 580 billion yuan in net worth

“If you sell a bitcoin that you bought at a maximum value of $69,000 now, you will lose $49,000 (about 320,000 yuan), enough to buy a Tesla Model 3.” Some people were amazed.

The historical loss rate has caused heavy losses for players, and some people joked that Bitcoin rich people are “returning to poverty overnight”. According to the Bloomberg Billionaires Index, seven cryptocurrency-related billionaires have lost a combined $114 billion from the Bitcoin price “highlight” in November to today.

The most obvious example of losing weight is Zhao Changpeng, the founder of Binance, the world’s largest cryptocurrency exchange, who became the richest Chinese in the world with a net worth of nearly US$96 billion at the end of last year. With the collapse of Bitcoin, as of June 15, Changpeng Zhao’s net worth has plummeted 89.3% this year, evaporating $85.6 billion (about 580 billion yuan).

As a well-known holder of Bitcoin, Tesla also suffered heavy losses in this wave of market. Data shows that Tesla currently holds 43,200 bitcoins, worth $968 million, and has lost about $530 million in bitcoin investments.

What’s more, El Salvador, a country that uses bitcoin as legal tender, faces huge financial risks due to the shrinking value of bitcoin. The government of El Salvador has previously bought 2,301 bitcoins.

According to data from nayibtracker.com, the total cost of coin purchases in El Salvador was US$105 million, with an average purchase price of nearly US$46,000 per coin. According to the latest currency price ($20,453.57), the Bitcoin held by El Salvador has lost 55.45%.

Who made cryptocurrencies “fall off the altar”?

In fact, it is not only Bitcoin that has experienced the catastrophe, but many cryptocurrencies are not optimistic. For example, the second-largest cryptocurrency, Ethereum, fell below $1,000 on June 18, returning to the “triple-digit” era, hitting a minimum of $880. The luna currency, whose market value was as high as $41 billion, also experienced a diving depreciation before, and the price fell from nearly $90 to less than $0.0001.

Multi-party analysis pointed out that high inflation and interest rate hikes by many central banks have stimulated investors’ concerns about economic recession, the demand for safe-haven in the financial market has increased, and a large amount of capital has flowed out of bitcoin and other cryptocurrency markets, resulting in a sharp drop in prices recently.

What is even more worrying is that under the haze of capital exit, some investors have been unable to withdraw funds from some cryptocurrency exchanges recently, resulting in even more panic over the liquidity of virtual currencies.

For example, Binance suspended bitcoin withdrawals for several hours last week, citing some transaction lag; the cryptocurrency lending giant Celsius, which has 1.7 million users, also announced that it would suspend accounts due to “extreme market conditions” All withdrawals, swaps and transfers between.

So, is the low-to-freezing Bitcoin a bargain-hunting opportunity? According to Sam Callahan, an analyst at Bitcoin exchange Swan, based on previous bear market experience, Bitcoin could fall by more than 80% from its all-time high. This means Bitcoin will drop to $13,800.

In addition, according to historical experience, after Bitcoin fell sharply, a large number of funds often entered the market to try to buy the bottom, but now the flow of funds is the opposite, and these funds are now inclined to continue to withdraw from the cryptocurrency market.

However, there are also some senior players who are expecting the market to return to stability. For example, Musk issued a document on the 19th in support of Dogecoin, which he has always loved, and the price of Dogecoin also rose by 8%. However, after counting the rebound, Dogecoin has fallen by more than 60% year-to-date.

Dogecoin co-founder Jackson Palmer also recently stated in an interview that the bottom of the cryptocurrency “house of cards” has “started to crumble.”

Data map: US dollars. Photo by Zhongxin Finance and Gong Hongyu

Is Bitcoin a “Stupid” Game?

The sudden plunge of Bitcoin in this round has once again challenged the underlying logic of its operation.

Buffett, the “number one opponent” of cryptocurrencies, has said that Bitcoin is not a productive asset and does not produce anything tangible. The encrypted digital asset market that exists in the virtual world is often weak when faced with a crisis, and any negative event will be amplified.

Buffett also bluntly said that even if the total price of all bitcoins in the world was only $25, he would not buy it.

On June 14, Microsoft founder Bill Gates said at the event that the cryptocurrency project is a scam based on the “greater fool theory”. That is, as long as you find a more stupid person to take over the investor’s assets, even if the assets are worthless garbage, the investor can still make money.

Undoubtedly, most Bitcoin players enter the market with the idea of ??making money. After all, there are too many myths about “making wealth” in this field. However, Bitcoin’s sudden slump once again revealed the potential huge risks in the virtual world.

The Chinese government has explicitly banned cryptocurrency exchanges, led by Bitcoin. In July 2021, the central bank issued an announcement stating that consumers should increase their awareness of risks, do not participate in virtual currency trading speculation, blindly follow virtual currency-related speculation, and beware of damage to personal property and rights.

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