Editor's Note: This article comes fromLongHash Blockchain Information (ID: Kyle Torpey)Editor's Note: This article comes from
LongHash Blockchain Information (ID: Kyle Torpey)
LongHash Blockchain Information (ID: Kyle Torpey) Since the creation of Bitcoin by Satoshi Nakamoto in 2008, its peer-to-peer, non-supervision and other characteristics have made everyone think that it is an asset that is completely contrary to traditional assets. Although we think that Bitcoin has no functional value support so far, as Bitcoin is gradually known to the society, the distribution of coins is becoming more and more scattered, and there are certain costs in terms of production and energy consumption. The price of Bitcoin is gradually moving higher. With the good performance in several geopolitical crises in 2019 and the first half of 2020, Bitcoin's safe-haven attributes are praised, and there are more and more arguments calling Bitcoin "digital gold". But it is a pity that in the black swan event of the global asset market caused by the new crown virus in 2020, Bitcoin did not go out of the expected upward performance like gold. Instead, it quickly fell from around US$9,000 to the lowest US$3,800 after the detonation of the derivative crude oil crisis. Is the Bitcoin safe-haven myth busted? Or is this story similar to the story of payment and dark web transactions, but it's just a story. Next, we will analyze from multiple points to explore the hedging properties of Bitcoin. liquidity depletion In addition, Coinbase's USD is continuously discounted relative to the USDT trading pair, which means that compliant users on Coinbase are net selling Bitcoin instead of buying it. In contrast to the Bitcoin bull market in early 2019, the core is the continuous premium of Coinbase, which means that both giant whales and institutional investors are entering the market. The depletion of liquidity in the interaction between Bitcoin and the traditional market has led to the fact that hedge funds will not consider Bitcoin first when encountering a crisis, so naturally there is no basis for discussing the hedging properties of Bitcoin. secondary title Relatively overpriced The trend of this round of Bitcoin is very interesting. At first, it was because at the beginning of the year, driven by the US-Iran war crisis, Bitcoin quickly climbed from around US$7,000 to around US$9,000. will be outlined in the next section), and the bigger reason is that the "production cut" story is being hyped on the floor. In theory, production cuts will lead to an imbalance between supply and demand, leading to higher prices. But it is a pity that the "production reduction" in the currency circle is just a hype gimmick. This shows that this round of the market is self-indulgent on the market. From a market perspective, internal factors trigger external factors, and there is no inflow of new funds. For them, the hedging demand brought about by the influx of funds is an uncertain proposition, but the harvest of futures positions caused by the collapse of the market is a definite proposition. Between certainty and uncertainty, I believe that every rational economic person will make a choice. secondary title Expected and exceeded expectations The black swan incident can be broadly understood as an unexpected event. The killing of the leader of the Revolutionary Guards caused the Bitcoin to plummet, and so did the full-scale outbreak of the new crown virus. But the intensity of the two is completely different. The US-Iraq war has been going on for a long time, and the use of force by the United States is also within the expectations of some people. Then there is a reason for funds to enter the bitcoin market to game the avoidance of bitcoin when the war really starts. If there is a demand for insurance, and the price of bitcoin is very low at that time point, then the odds of the game are sufficient, so when the unexpected situation occurs, bitcoin will rise accordingly, and it does not matter whether funds will flow in after the rise. Then the first reaction of assets is to pour into U.S. bonds and yen, and then play safe-haven assets under the premise of ensuring their own safety. And even if you play games, you will choose the ones you are familiar with, rather than the unfamiliar and poorly liquid bitcoins. Therefore, when a high-intensity unexpected event occurs, we cannot expect Bitcoin to have an immediate chain reaction like gold. It is also a human instinct to be a safe-haven species that is widely recognized. secondary title risky asset perhaps Having said so much, it can be regarded as a few reasons why Bitcoin is not a safe-haven asset. Of course, in addition to these reasons, there are many commonplace reasons that will not be repeated one by one. Since it is not a safe-haven asset, what type of asset does Bitcoin belong to? I personally think it is a risky asset. Here are a few points of view. LongHashFirst of all, the first point is that Bitcoin actually had a certain lagging linkage with U.S. stocks last year and this year. Although there is no statistical proof for the time being, this is what we have observed based on charts and event-driven observations.In the course of these eleven years, Bitcoin holders have set many labels on Bitcoin, such as payment, dark web transactions, digital gold, etc. Unfortunately, with the development of blockchain technology, Ripple has appeared in the payment field, and digital currencies using blockchain technology such as Libra will appear. Litecoin and many privacy coins such as Monroe and ZCASH have also replaced Bitcoin and become the mainstream payment currency in the dark web.
As we all know, all products that can be selected by traders as trading targets in the market must have strong liquidity. On the contrary, there may be a problem of paying too much impact cost when opening or closing a position, and it is more likely to be smothered when there is insufficient liquidity and other users rush away in extreme cases. It is a pity that Bitcoin's current liquidity does not meet the trading standards. Although in the Bitcoin market, the daily turnover is close to 50 billion U.S. dollars (Coinmarketcap data, without considering the trading volume of the exchange), but observing the indicators of whether to buy Bitcoin in the traditional financial market, we can see that the position of CME Bitcoin futures The volume has continued to decline this year, which also means that there are not many institutional traders using Bitcoin futures as a hedging method through compliant futures exchanges.
For funds that want to enter the market outside the market, the high of US$9,000 is about 1.4 times the low of around US$6,800. The risk-benefit ratio of continuing to enter the market is not appropriate, let alone ambush the so-called hedging demand. For the market makers and predators in the market, there is a lot of leverage mixed in this round of the market, so that the futures positions continue to remain high. Continuing to push up the gains. On the one hand, the futures positions are liquidated at a profit, and the capital pressure required to pull them up is too great. On the other hand, the long-term sentiment is strong. The long-short ratio once reached 3:1, and the annualized long-term funding rate exceeded 100%. At this point it is clear that the odds are higher for down than up. Then it is obvious that the next trend is a downward breakthrough.
But the new crown virus is different. After spreading wildly in China, only a few countries such as Japan and South Korea have a small number of infections. area erupted. This is a completely unexpected event, analogous to the geopolitical crisis in Iran, which killed the leader of the Revolutionary Guards. Iran did nothing but launch missiles to bombard the United States, and even triggered World War III. This kind of unexpected event is unknown to any investor, and this kind of game about the unknown is the most terrifying.
