cryptocurrency has involved countless celebrities from “making wealth” to collapse, and many complacent investors have also stumbled. In this torrent of venture capital, there are countless investment “Xiaobai” figures. They once entered the game with curiosity or dream impulse. Now they have experienced vicissitudes and become more cautious
Recently, Luna, a cryptocurrency with a market value of $41 billion, fell from nearly $100 to “zero” in less than a week.
Luna’s slump caused a big earthquake in the currency circle, and hundreds of cryptocurrencies fell collectively. At present, the price of bitcoin has fallen by more than 50% from the record high in November last year.
The New York Times said it was the biggest panic since bitcoin prices plunged 80% in 2018. Critics said the collapse was “long overdue”. Some traders compared this with the beginning of the financial crisis in 2008.
Behind the “wealth making movement” of cryptocurrency, not only celebrities and investors are involved, but also some ordinary retail investors are attracted, especially the post-90s coin circle players.
Lin Jian (a pseudonym) has been paying attention to cryptocurrency since he was a student, and it has been nearly 10 years now. Born in finance, he witnessed the whole process of cryptocurrency from unknown to prosperous in China. Recently, he shared with the reporter of the international finance news the journey of his mind in the past 10 years.
sudden rise
“At that time, I found that the main purpose of cryptocurrency was to do research on the concept of cryptocurrency in 2012. At that time, I saw that it was mainly an innovative product in the black market.” Lin Jian told reporters.
Bitcoin was born in 2009. It is a decentralized digital currency issued without relying on specific monetary institutions. It is produced by computer based on a set of specific password codes and through complex calculation. It has the characteristics of low transaction cost, no freezing, user information concealment and so on.
“As a decentralized monetary product, bitcoin was only a trading medium on black market websites at first. There were many illegal ingredients, so I didn’t buy it at that time and didn’t conduct further research.” Lin Jian said.
At that time, cryptocurrency was little known in China. Lin Jian showed the reporter the research report he had made at that time according to the data of bitcoin, the global search of Google trend at that time, Russia ranked first, the United States ranked second, and China was almost blank
However, in 2013, cryptocurrency emerged and developed rapidly in China. China’s bitcoin exchange website, BTC China, had a trading volume of 20000 bitcoins in April 2013. By the end of the year, it had exceeded 90000 bitcoins, surpassing established websites and becoming the largest exchange in the world. China has also become the market with the largest trading volume of bitcoin.
“In the following three years, the price of bitcoin fluctuated in the range of hundreds of dollars, and national regulators began to pay attention to cryptocurrency and warn of risks.” Lin Jian said.
twists and turns to create wealth
2017 is a crazy year for cryptocurrency the price of bitcoin rose from $1000 at the beginning of the year to $19780 at the end of the year, nearly 20 times
In September of the same year, Chinese regulators decided to close the legal currency exchange of virtual currency in China.
At that time, Lin Jian just changed jobs, from the seller’s organization in the financial industry to the investment department of listed companies. The investment projects include two blockchain projects.
“At that time, after in-depth research, I personally thought it was very interesting, so I took out a sum of money as a venture capital.”
after the peak in 2017, the price of bitcoin plummeted in 2018 “after I invested, when the price was the lowest in the second year, it fell to only about 1 / 3 of the original. At that time, I felt that the investment had failed and I didn’t manage it anymore.” Lin Jian said.
Lin Jian didn’t sell these cryptocurrencies. He mocked himself that he “has faith in blockchain / distributed ledger technology”.
time comes to the end of 2020, and the price of cryptocurrency has experienced another round of rise “at that time, some mainstream investment institutions in the United States began to enter the market, which was equivalent to the recognition of the status of cryptocurrency by a larger and more authoritative group. At this time, the investment logic was different.” Lin Jian said.
According to the data, 2021, the amount of cryptocurrency traded by institutional customers on the exchange coinbase global Inc. was $1.14 trillion, higher than the previous year’s only $120 billion, and more than twice the amount of retail transactions of $535 billion
Lin Jian said that he didn’t know much at that time, so he sold some of the original positions that had been paid back, and the remaining funds were invested in dog coins and other small varieties of cryptocurrencies.
in 2021, the dog coin won the platform of Tesla CEO musk. From 0.5 cents per piece at the beginning of the year, with a market value of $600 million, to almost $100 billion at the peak, with a market value of 73 cents per piece, an increase of 146 times
In the past year, in addition to musk, Hollywood celebrities and top athletes have also become enthusiastic about cryptocurrency. In social media and public occasions, they portray virtual currency as a world with its own fashionable culture and philosophy, a world that is more inclusive than traditional finance and has the opportunity to make big money.
“The crazy profit in 2021 makes me feel exciting and excited.” Looking back on the bull market of cryptocurrency in 2021, Lin Jian believes that due to the release of monetary policy by the Federal Reserve, many funds in the market choose to enter the cryptocurrency industry, and the price of cryptocurrency will rise. In addition, the new directions of blockchain technology application last year, including decentralized finance, NFT, metauniverse, etc., were developed from the underlying technology. These directions excite people and generate long-term expectations.
“In this process, there is also a wealth creating effect, that is, many people get ten times, a hundred times or even a thousand times the return through this investment. The wealth increases very fast, and it also attracts more new people to invest in this industry for trading and investment. The more money they come in, the higher the price of money.” Lin Jian said frankly.
foam burst
The “wealth making myth” of the currency circle allows a large number of investment “Xiaobai” to enter, but when the market gradually calms down, some professional investors choose to exit.
“By the fourth quarter of 2021, the heat of the whole market began to decline. At this time, I think the price of cryptocurrency has far deviated from its actual value. The valuation of some projects is very high, but the actual value generated is not much related to real life. In other words, there is no business scenario and value to support this project, so many institutional investors will choose to make a profit.”
for cryptocurrency, many investment leaders are also critical. Buffett and Munger think this is a scam. Cryptocurrency itself has no production capacity. Hedge fund boss Ekman also criticized the stable currency as a “pyramid scam”
Lin Jian said that the recent sharp decline of Luna currency has greatly reduced the price of the whole cryptocurrency market, now it has entered a long bear market
It is reported that terraform labs, a South Korean blockchain company, launched an algorithm linked to the US dollar to stabilize the currency ust and the token Luna that can be exchanged with ust in 2020, promising to provide Luna currency investors with a return of up to 20% of the annual interest rate.
According to coindesk data, ust and Luna have fallen significantly since May 10. On May 16, UST, which should have anchored the value of US $1, once fell to an all-time low of 6 cents per piece, down 94%. At present, Luna has fallen to US $0.0001 per piece, almost to zero.
on the day of the sharp decline of luna currency, nearly 400000 people broke their positions, and the largest single position reached US $10 million. Only dozens of virtual currencies with trading volume fell by 90% or more
Zhao CHANGPENG, founder of Qian’an, joked on twitter last week that he had “returned to poverty” overnight due to the collapse of the stable currency Luna. Unlike traditional finance, even a “big player” like himself may eventually bear the burden of the cryptocurrency industry.
Lin Jian believes that “the slump of Luna currency does have a great impact on the whole market. At the same time, from the macro environment, if the Fed continues to raise interest rates or exceeds expectations, it will have a great impact on the liquidity of the whole market. If the liquidity reduction is severe, it will be a blow to cryptocurrency.”
In Lin Jian’s opinion, some cryptocurrency projects need to create real business scenarios and expand applications. Only with enough users and income can the valuation be improved and the whole market be revitalized “but these do take time to verify.”.
