Always witnessing history.
On Friday night, the collective "avalanche" of Chinese concept stocks shocked global investors. However, at noon on Saturday, virtual currencies also began a collective "flash crash". Bitcoin plummeted by $10,000 in the afternoon, and the 24-hour drop once exceeded 20%.
The latest data shows that in the past 24 hours, a total of 417,000 people liquidated their positions, and the liquidation amount of digital currency contracts across the entire network reached US$2.584 billion (approximately RMB 16.4 billion). Among them, the liquidation amount of Bitcoin alone exceeded US$1 billion within 24 hours.
According to the latest data from the CoinMarketCap website, as of 9 pm on Saturday, the total market value of global digital currencies was US$2.2 trillion, a decrease of 16.74% from the previous day, and the evaporated market value exceeded US$440 billion (approximately RMB 2,805.3 billion).
According to rough calculations based on public data, with the collapse of Binance Coin, Changpeng Zhao, who is regarded by Forbes as the richest man in China, may lose more than 10 billion yuan in one day.
Virtual currency collective “flash crash”, 417,000 people liquidated their positions
We have just witnessed the collective plunge of Chinese concept stocks. At noon on Saturday, virtual currencies also experienced a "flash crash".
Performance of well-known Chinese concept stocks as of Friday’s close
Market data shows that at noon on December 4, Bitcoin quotations fell below $42,000 for a short time, a 24-hour drop of more than 20%. Ethereum fell below $3,500, losing more than 21% in 24 hours.
As of around 7:40 pm on December 4, Bitcoin was quoted at about US$46,500 per coin, down more than 18% in 24 hours; Ethereum was quoted at about US$3,850 per coin, down by about 16% in 24 hours. In addition, EOS currency fell by more than 28%, Ada coin fell by more than 22%, Monero fell by more than 20%, Dogecoin fell by more than 22%, and Binance Coin (BNB) fell by nearly 13%.
Previously, the price of Bitcoin hit a record high in November this year, breaking through to $69,000, and the overall market value of cryptocurrency climbed to nearly $3 trillion. However, after the failure to hit the $70,000 mark, the price trend of Bitcoin was obviously weak. The highest price of Bitcoin hit $59,000 on December 1 and has been falling since then.
The latest data shows that as of 8 p.m. on December 4, a total of 417,000 people have liquidated their positions in the past 24 hours, and the liquidation amount of digital currency contracts across the entire network has reached US$2.584 billion. Among them, the liquidation amount of Bitcoin alone exceeded US$1 billion within 24 hours.
What is the reason for the collective “annihilation” of virtual currencies? There are different opinions on this on the Internet.
Some analysts said that behind the collapse of virtual currencies may be the resonance of multiple factors: including expectations of interest rate hikes (surge in short-term interest rates), pessimistic expectations of stagflation, expectations of Taper acceleration, etc. In addition, risk factors include the continued spread of new variants of the Omicron strain of the new coronavirus mutated virus. “In short, risk assets are currently undergoing a sharp correction, and the correlation between crypto assets and mainstream risk assets is also increasing.”
On December 3, local time, Maria Van Kerkhove, technical director of the World Health Organization's health emergency project, said in Geneva that from what she learned, the Omicron strain of the new coronavirus mutant virus has appeared in at least 38 countries and regions around the world, and relevant cases have been reported in six regions under the jurisdiction of the WHO. The WHO recently pointed out that the risk of the Omicron virus causing a surge in infection cases globally is "very high" and may bring "serious consequences" to some regions.
"The richest man in China" Zhao Changpeng's net worth may shrink by more than 10 billion in one day
Recently, there has been a lot of big news in the currency circle. Changpeng Zhao, the founder of the cryptocurrency platform Binance, surpassed Zhong Suisui, the chairman of Nongfu Spring, and became the new richest man in China. The news is also on the circle of friends.
According to Caijing, Binance was founded only four years ago and has become the world's largest cryptocurrency exchange, with 3,000 employees worldwide and a daily trading volume of US$76 billion, which is more than its four largest competitors combined. According to insiders, based on the current transaction scale, Binance’s valuation will reach US$300 billion (approximately RMB 1,912.7 billion).
It is reported that Changpeng Zhao controls a majority of Binance’s shares. According to Forbes, founder Changpeng Zhao owns 30% of Binance shares. Based on this calculation, Zhao Changpeng's net worth has now reached 90 billion US dollars (equivalent to 573.3 billion yuan). This net worth means that Zhao Changpeng has become the richest man in China and ranks among the top ten richest people in the world.
However, on November 30, Changpeng Zhao posted information on social media saying that if he sold 0.01% of the company's equity for 1 US dollar, would the company be worth 10,000 US dollars? If a total amount of 1 trillion currency was issued and a token was sold for 1 US dollar, would he have a currency worth 1 trillion US dollars. And in the subsequent comment, valuation without liquidity means nothing. Suspected to be in response to a hot search about the new richest Chinese man with a net worth of US$90 billion.
As of 8 p.m. on December 4, Binance Coin (BNB) fell nearly 13%, with the latest total market value approximately US$90.776 billion, a decrease of more than US$13.5 billion compared to the previous day's total market value.
Changpeng Zhao has said that in terms of investment, he owns some Bitcoin, but the majority of his assets are Binance Coin. However, Changpeng Zhao did not disclose the number of Binance Coins he holds. However, according to previous public information, the Binance team holds about 40% of Binance coins, and Forbes data shows that Changpeng Zhao owns 30% of Binance shares. Based on this rough calculation, Zhao Changpeng's net worth shrank by about 10.3 billion yuan (about 1.62 billion U.S. dollars) in one day.
According to past reports, Changpeng Zhao is a Canadian-Chinese who has a high influence in the field of cryptocurrency and is known as "CZ". He was born in 1977 and lived in Jiangsu as a child. Later, he moved to Vancouver, Canada with his family, and currently lives in Singapore temporarily.
In 2005, Zhao Changpeng successively founded Fuxin Information, Bijie Technology and other companies in Shanghai, making his first pot of gold. He entered the Bitcoin field in 2013, and founded Binance with his team in 2017, issuing the digital currency "Binance Coin" (BNB). Half a year later, Binance reached 6 million users, becoming the world's largest cryptocurrency exchange and maintaining its leading position in the industry to this day. Changpeng Zhao said that he hopes that Binance will grow at a more moderate rate. "We hope that other exchanges can grow a little stronger so that they can share user pressure with us."
According to data from the Coinglass website, in terms of Bitcoin holdings, as of 9 pm on the 4th, the Bitcoin contract holdings of the blockchain trading platform Binance accounted for 22.18%, ranking first among all platforms.
However, globally, cryptocurrency exchanges lack regulation and fall into a gray area in many countries. So far, Binance has received warnings from financial regulatory agencies in the United Kingdom, Germany, Japan, Malaysia, South Africa, Singapore and other countries, and has successively announced the withdrawal of users from the United States, China, and Singapore.
SEC Chairman: Concerned about ETFs that directly hold Bitcoin
According to the latest news from Bloomberg on December 4, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler expressed concerns about ETFs that directly hold Bitcoin. In response to a question from Pat Toomey, the top Republican on the Senate Banking Committee, Gensler reiterated his concerns about Bitcoin’s lack of regulation and the potential for fraud and manipulation.
On October 15, the first Bitcoin futures ETF in the United States was approved. The U.S. Securities and Exchange Commission approved the listing of the Bitcoin futures ETF applied by ETF giant ProShares under the code BITO. According to Bloomberg statistics, on the first day of listing, BITO changed hands more than 24 million units, and the total trading volume on the first day was close to 1 billion US dollars, second only to BlackRock's carbon neutral ETF, becoming the ETF with the second highest first-day trading volume in history.
Also in October this year, the second Bitcoin futures ETF, the Valkyrie Bitcoin Strategy ETF, was also traded on Nasdaq under the trading code BTF. In mid-November this year, the third VanEck Bitcoin Strategy ETF (XBTF) was also listed for trading.
However, compared with the successive approvals for listing of Bitcoin futures ETFs, the United States is still very cautious about Bitcoin spot ETFs. In November this year, the U.S. Securities and Exchange Commission rejected VanEck’s application for a Bitcoin spot ETF.
Gensler said that while he is comfortable with futures-based ETFs because Bitcoin futures trade on highly regulated exchanges, the same cannot be said for Bitcoin spot.
China strengthens virtual currency regulation
It is worth noting that recently, the cryptocurrency trading platform Huobi began to issue internal messages to remind users in mainland China to clear their account assets, and made it clear that the currency deposit function for users in mainland China will be closed on December 14. On December 15th, the currency trading function for mainland Chinese users will be banned, and on December 31st, OTC transactions will be removed.
Since 2021, the People's Bank of China has interviewed some banks and payment institutions on the issue of speculation in virtual currency transactions, requiring banks and payment institutions to strictly implement regulatory provisions such as the "Notice on Preventing Bitcoin Risks" and "Announcement on Preventing Token Issuance Financing Risks", effectively perform customer identification obligations, and must not provide account opening, registration, trading, clearing, settlement and other products or services for related activities.
On September 24, ten departments including the People's Bank of China jointly issued the "Notice on Further Preventing and Dealing with Speculation Risks in Virtual Currency Transactions" (hereinafter referred to as the "Notice"). The "Notice" clarified that virtual currency-related business activities are illegal financial activities, and the provision of services by overseas virtual currency exchanges to residents in my country through the Internet is also illegal financial activities. On the same day, 11 departments including the National Development and Reform Commission jointly issued the "Notice on Regulating Virtual Currency "Mining" Activities" to comprehensively rectify the "coin speculation" pattern across the entire chain.
Guosheng Securities analysis believes that with the promulgation of the “924” document, China’s crypto asset supervision has entered a new era. This policy is the most stringent policy in the history of China's crypto-asset supervision after the People's Bank of China, the Cyberspace Administration of China and seven other departments issued the "Announcement on Preventing Financing Risks of Token Issuance" on September 4, 2017 (known as the "September Fourth").
Guosheng Securities believes that the "924" has the following characteristics compared to the "94": 1) The regulatory situation is more severe; 2) There are more regulatory authorities, including the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Public Security, and the State Administration of Foreign Exchange, and the characterization is more stringent; 3) There are more regulatory reasons involved; 4) There are more regulatory measures; 5) More business types are involved; 6) More business behaviors are involved.
Munger: China did the right thing by banning cryptocurrencies
According to the Australian Financial Review, "Stock God" Buffett's old partner, 97-year-old Charlie Munger, said at an investment conference in Sydney on December 2: "I think the Chinese made the right decision, which is to ban them (cryptocurrencies), and my country made the wrong decision."
Munger praised China for not letting the cryptocurrency investment craze go too far and "they acted in a more mature way." He also said that he would never buy cryptocurrencies and wished cryptocurrencies had never been invented. He also said that the current global stock market environment is even "crazier" than the Internet bubble in the late 1990s.
"I can't stand to be part of this crazy boom, one way or another. It seems to be working fine and everyone wants to get in, and I have a different attitude." Munger added, "I want to make money by selling people things that are good for them, not selling them things that are bad. Trust me, people who create cryptocurrencies are not thinking about their customers, they are only thinking about themselves. I personally can't stand to be part of these crazy booms, in any form."
