Fell Nearly 20% in 24 Hours, What is the Culprit of Bitcoin's Big Plunge?

Today, the cryptocurrency sector finally ushered in a large-scale callback, interrupting the recent happy bull market atmosphere.

Bitcoin, which is entering the ranks of asset allocation, plummeted by nearly 20% within 24 hours. According to data, more than 200,000 people suffered liquidation, and the entire network liquidation amount will be $2.1 billion, which is the largest amount of liquidation in the past 30 days. Most of them, Bitcoin liquidation amounted to nearly $1.3 billion, and many parties suffered heavy losses.

This weekend, Bitcoin benefits appeared intensively: JPMorgan Chase claimed that Bitcoin would reach $14 million per coin, Skybridge Capital held a Bitcoin fund conference call, but the conference network was crowded, and Tesla founded Musk said he would not refuse Bitcoin payments…Under the frantic bombardment of information across the bank, Bitcoin entered a sideways state on January 7 and finally ushered in a decline.

Turbulent Commodity Market

Crypto digital currencies represented by Bitcoin are not the only varieties that have been affected. Today’s commodity market also suffered a plummet, and bulk commodities such as gold, silver, and COMEX copper also plummeted.

In the Asian market today, spot gold once fell below the 1,820 US dollar/ounce mark, falling nearly 4%, silver once fell nearly 10%, COMEX copper once expanded to 2%, and gradually recovered after a while, and Bitcoin followed the bulk market trend has gradually stabilized.

According to market analysis, the reason why the price of gold plummeted today is related to the continuous increase in US bond yields, and during this period, the US dollar index maintained a strong rebound. According to Data, the U.S. bond yield has skyrocketed since January 5, breaking 1% and hitting 1.122% at one time, and it is still at 1.107%, forcing the price of gold to fall.

The direct reason for the drop in copper prices is that the non-agricultural data in the United States was less than expected. Last Friday, the United States released non-agricultural data: it showed that the number of non-agricultural employment in the United States decreased by 140,000 in December, the first decrease since April last year. It is estimated that there will be an increase of 50,000, with the previous value increasing by 245,000; the unemployment rate in the United States rose to 6.7% in December, and the downward trend in July before the end, the previous value and market expectations were 6.7% and 6.8% respectively.

At present, we still need to pay attention to Biden’s economic stimulus plan after taking office. The data we need to pay attention to this week include China’s December inflation data, U.S.’s December inflation and retail sales.

It is worth noting that Goldman Sachs recently revised its expectations for the U.S. economy overnight. Analyst Hazus said that the Democrats will pass another $750 billion fiscal stimulus plan next month, so the U.S. economy will experience a “substantial recovery” sooner.

To support massive U.S. bond sales, U.S. bond yields may continue to rise

At the end of last year, the Financial Times published a column saying that the United States will issue a large number of long-term bonds to the market this year. JPMorgan expects that despite the massive bond purchase by the Federal Reserve, there are still $1.8 trillion of US Treasury bonds with a maturity of more than one year to be digested by the market. Based on the expectations of inflation and economic growth this year, the United States may raise interest rates to attract investors to buy.

Subadra Rajappa, head of U.S. interest-rate strategy at Societe Generale, believes that U.S. Treasury bonds will be reduced this year, and the 10-year Treasury bond yield will rise to a high of 1.5%.

In its recent global economic risk report, Deutsche Bank mentioned its concern about U.S. debt, pointing out that nearly 120 billion U.S. Treasury’s newly issued five-year and three-year U.S. debt is unsalable again. In addition, according to the international capital flow report released by the U.S. Treasury Department on December 17, global central banks have reduced their holdings of U.S. debt by nearly 115 trillion yuan, reaching the peak of global central banks’ selling off U.S. debt.

Twitter: ICoinTime

Facebook: IC ICoinTime

Originally published at https://en.icointime.com on January 12, 2021.