Bitcoin, pushed up by the super liquidity after the epidemic, once again showed its bloody and dangerous nature to new investors with a single-day drop of more than 30%.
According to AIcoin data, as of 11:00 p.m. on May 19, the burst of positions within 24 hours had reached US $6.4 billion (about RMB 41.1 billion), far exceeding the burst of positions when selling and stampede under the epidemic panic on March 12, 2020.
A loose end, seems to be caught off guard, but everything has a trace to follow. The founder of a head exchange told Tencent News “Qianwang” that the carnival of dogecoin and Shib not long ago indicates that the market has gone into a frenzy and a sharp drop may occur at any time.
Everything seems familiar, the founder commented, “the same scene happened in the last bull market, in a shares or overseas stock markets. When the values advocated by the core blockchain circle are being dispelled and fall into the unconscious carnival, it is the end of the banquet. ”
Jiang Zhuoer, the founder of the Litecoin mining pool, warned that since the currency circle is a global market without any circuit breaker and supervision, there are many kinds of high-power futures options, mortgage loans, and crazy high leverage, so stampede is bound to happen again and again.
However, some people who still have the strength to do so have begun to borrow money again and are ready to buy the bottom. Musk, the leading big brother, has also started to maintain stability in social media. “Tesla has 
“, which means bitcoin has not sold its position at the moment.
A group of investors who followed musk to buy bitcoin or dogecoin apparently didn’t buy because of the nearly sharp decline in recent days. The most popular message read, “Elon, I hate you. You’ve made me lose my life savings.”
From announcing Tesla’s support for bitcoin payment, changing twitter signature to bitcoin, and then questioning bitcoin mining as a waste of energy, Musk’s attitude toward this largest encrypted asset by market value has repeatedly reversed the attitude of many coin circle fans towards it. Among them, some voices began to call short Tesla on social media to avenge Musk’s “abandonment” and “market manipulation” of bitcoin.
Industrial capital pushes wave, social media helps the wave
Starting from the super liquidity after the epidemic, encryption assets such as bitcoin will be favored by funds and industrial capital including grayscale, MicroStrategy, etc. by the end of 2020. After the investment of real money and silver, the price of bitcoin will continue to rise.
Grayscale investment is a subsidiary of the digital currency group (DCG) established in 2013. The particularity of grayscale is that it provides a legal channel for investors to buy and sell cryptocurrency. As long as there is a U.S. stock account, they can trade the crypto asset trust fund GBTC set up by grayscale just like buying and selling stocks in the secondary market, regardless of the complicated cash flow of the currency trading.
In addition, listed companies, including MicroStrategy, are also targeting bitcoin in 2020. MicroStrategy, which had been losing money continuously, realized the “Jedi counter killing” of the company’s share price by continuously investing in bitcoin and bringing it into the balance sheet. CEO Michael seller has also become one of the 12 newly added cryptocurrency billionaires in Forbes. Under the repeated overweight, the latest data of MicroStrategy shows that a total of 91850 bitcoins were purchased, with a total cost of US $2.24 billion and an average price of US $24403.
The booster for the second half of the bull market was provided by musk. In February 2021, musk, who had just directed retail investors to raise Gamestop to defeat Wall Street, began to promote bitcoin frequently on social media. First, he changed the signature column to “bitcoin”. Then Tesla, the company he founded, announced that it would buy $1.5 billion worth of bitcoin and accept bitcoin to pay for cars.
Under the wide influence of real gold and social media, bitcoin prices are rising again and again, reaching new highs.
The leader of the coin circle civil war was killed
But Musk’s real intention is not bitcoin, but dogecoin. As early as 2019, musk called himself the honorary CEO of dogecoin on Twitter. Then he kept in touch with the development team of dogecoin and proposed to provide funds for the development of dogecoin. However, the development team politely rejected this proposal.
In the conversation with the team, musk mainly suggested that they improve the transaction throughput of dogecoin. Bitcoin is limited by the 1m block size at the time of design, and the transaction throughput can only support about 6 transactions per second, so it is also regarded as the biggest weakness of bitcoin used as a payment tool. To improve the transaction throughput of dogecoin is aimed at the weakness of bitcoin.
After supporting bitcoin for three months, musk suddenly launched an attack in May, attacking bitcoin mining for consuming too much energy. Therefore, Tesla suspended using bitcoin to pay for car purchases and considered using cryptocurrency with lower energy consumption.
Subsequently, musk also supplied bitcoin’s decentralized features, “bitcoin’s computing power is highly centralized, and the power supply barrier in a single region has reduced bitcoin’s computing power by 35%, which is obviously not decentralized.”
At the same time, he pointed out that dog coin could speed up the block time by 10 times, increase the block size by 10 times and reduce the handling fee by 100 times in the ideal car situation.
Musk’s one hold and one step triggered a new civil war in the coin circle. He even asked fans directly on Twitter whether Tesla should accept dogecoin as a way of payment. Among the nearly 4 million people who participated in the voting, 78.2% expressed their support.
But the action of sitting on public opinion and trying to pull bitcoin down from the altar made musk feel the power of backfire. The sudden rise of dog money eventually led to the carnival of animal money such as Chai dog money and pig money soaring ten times a day, which soon ushered in the end of the song. On May 19, animal coins such as Chaigou coin and pig coin basically fell back to their original shape, and many fans following musk began to split up, leaving a message on social media saying that musk asked him to lose his house and family and become a homeless man.
KOL of the bitcoin community also began to attack musk, and even Jackson Palmer, co-founder of dogecoin, accused musk of being a gambler all the time and will be in the future.
“When the masses make decisions, they only depend on whether the symbol is linked to the hot spot, but when the tide fades, musk also changes from God to man.” The founder of the exchange said so.
The shadow of the frozen card becomes a difficult problem
On May 19, the Matcha MXC exchange, which still provides legal currency import in China, suspended OTC over-the-counter trading after China’s three major industry associations made a collective voice to rectify the virtual currency chaos and prompt the risk of currency speculation. In addition, bitpie, which is mainly engaged in the WALLET business, also announced on May 18 that it would stop OTC trading.
This also means that the entry of RMB direct purchase of virtual currency has attracted high attention of the regulatory authorities. The three associations stressed that the public should strengthen the awareness of risk prevention, cherish personal bank accounts, and not use them in activities such as virtual currency account recharge and withdrawal, purchase and sale of relevant transaction recharge codes and transfer of relevant transaction funds, so as to guard against the damage of personal funds.
Since its birth, bitcoin has become a well-known alternative asset and is known and traded by more and more people, even though its price fluctuates greatly from time to time. On the other side of the coin, the semi-anonymity of bitcoin has become a hotbed for some criminals to hide their identities, transfer funds and evade foreign exchange control. Especially since 2017, many countries, including China, have cut off the way of purchasing digital assets such as bitcoin with legal currency. A variety of stable currencies such as USDT and USDC, which anchor the US dollar at a ratio of 1:1, have become the basic tools of the currency circle, providing a more convenient and risk-free channel for the above behaviors.
Since 2020, with the joint efforts of the Ministry of public security, the central bank, and other departments to crack down on the governance of cross-border gambling capital chain, and with the help of virtual assets such as bitcoin and stable currency to launder money and transfer funds, supervision has paid more attention. Once some illegal funds are involved in the transmission chain, such as selling virtual currency at a suspected OTC merchant, or being judged as an abnormal transaction by the bank, the bank card freeze will be triggered, ranging from three days to two years. What’s more, they will be instructed by the public security department to cooperate with the investigation and explain the origin and development of the funds.
Under the tide of card freezing, although the currency price is rising at the end of the year, the OTC business is in danger. A senior player complained to Tencent News “Qianwang” that he started to boldly buy bitcoin from its low price in March, and then bet on some Defi concept assets, making more than 10 million this year. However, his friends’ experience of freezing cards made him dare not easily try to cash out, so he had to change into stable currency and put it on the exchange.
The money laundering risk caused by the virtual assets, especially the stable currency, is the fundamental reason for the whole currency circle to fall into the frozen tide.
A founder of virtual asset wallet told Tencent News “Qianwang” that “a few years ago, people in the coin circle were not so complicated, so KYC is better to do. However, in the past two years, there has been a lot of money involved in fraud, gambling and even drugs. If you want to use virtual money to wash it out through various disguises, you will be caught if you are careless.” An OTC company specializing in over-the-counter trading of virtual assets described to Tencent News “Qianwang” that although this part of the capital accounts for a very small proportion, once it is involved, the upstream and downstream of the whole capital communication chain will be involved, leading to card freezing and even more serious consequences.
“The biggest problem in the past two years is that cats and dogs have entered the coin circle, so we can’t touch these people.” Another businessman who has been engaged in OTC for many years complained that when he first worked in this business, the most important thing to audit customers was to prevent Telecom fraud funds. However, because of the rise of overseas gambling and slaughtering, these “cats and dogs” are all money related to gambling or even drugs. He wants to achieve the purpose of cross-border transfer or money laundering through trade.
“If you are careless, there will be a set meal for 37 days waiting for you, or even a direct sentence.” The businessman described that a colleague was used as a gambling fund intermediary because he did not carry out KYC thoroughly. He was released after cooperating with the public security department to investigate for 37 days and proved that he did not know about it. The bank cards of money speculators who were trading there were also frozen.
At a meeting held in September, Liao Jinrong, director of the International Cooperation Bureau of the Ministry of public security, introduced the situation of combating cross-border gambling crimes. He disclosed that according to preliminary statistics, the annual outflow of gambling-related funds from China exceeds 1 trillion yuan. Under the background of the increasing downward pressure of the current economy, the economic and financial security risks continue to increase. From the perspective of crime patterns, some gambling gangs use virtual money to collect and transfer gambling money, and even use investment as an excuse to engage in online gambling in some areas of Myanmar. This kind of new channel can not be frozen, anonymity is difficult to trace, which brings great challenges to the crackdown.
In October, the central bank disclosed that the central branch of the people’s Bank of China in Huizhou assisted the local police in cracking a cross-border online gambling case involving the use of virtual currency TEDA (USDT). 77 suspect suspects were arrested, 3 gambling websites were destroyed, and the amount involved was nearly 120 million yuan. This case not only circulates in the bank account, but also involves the virtual currency, and through several washes, the capital trend is extremely hidden.
“We are now trying to make pure transactions. In short, we have to audit every sum of money and currency we handle separately, but this is only an ideal. If we audit every flow, we have basically blocked 99% of our users.” The founder of the aforementioned virtual asset wallet said that under the situation of stricter supervision, OTC businesses are becoming more and more difficult to do.
In order to avoid the freezing of bank cards, the players of currency speculation have summed up a lot of experience. For example, they should not use salary cards or commonly used cards for business. If they are frozen, the mortgage and car loans will be broken, and the credit investigation will also have problems. They should not use the cards of large banks, because the risk control is more strict.
A similar experience is that the capital flows overnight. A higher-level approach is to buy and sell through different bank cards. The money obtained from selling currency is immediately bought into financial products and then withdrawn.
Tencent News “Qianwang” learned from close regulators that the central bank and the foreign exchange bureau already have perfect regulatory measures for the above-mentioned risks, and there are also special departments and bureaus directly responsible for them. “For example, on the day of the release of the white paper of Libra, we asked them to explain the risks.” In the trend of increasing supervision on anti-money laundering and cracking down on cross-border gambling capital flow, the crackdown on the grey behavior of the currency circle will only be more severe in the future.
It also means that the freeze-thaw may be just the beginning“ Compliance is the only way forward. ” The co-founder of a head exchange told Tencent News “Qianwang” that the exchange needs to do a good job in checking the source and conduct a more strict audit on the admittance qualification of OTC merchants.
Under the situation of high pressure, it is difficult to disperse the shadow over the players. An insider predicted that players who participate in currency speculation may experience the first frozen card in their life in the past year or two.
The Chinese Version Copyrights belongs to Tencent News QianWang. Translated by FirmKnow.
