The Bitcoin market has experienced a sharp decline in the past two days. It fell by US$10,000 in one day, creating the largest single-day drop in the Bitcoin history. Within two days, it fell from the highest of US$58,000 to the lowest of US$46,000. Although Bitcoin has caused such a big drop within a short frame, I think the bull market in Bitcoin will continue. Both the short-term and long-term factors that led to the increase in the price of Bitcoin will continue to exist. Therefore, the current decline is a short-term adjustment. It was not the beginning of the Bitcoin bear market.
In terms of long-term factors, the oversupply of the US dollar is still a fact that continues to exist. The market has full expectations for the resulting inflation and the depreciation of the dollar, and it is also adopting corresponding measures to hedge this risk. Assets that are considered scarce in the market have therefore been further sought after. High-quality real estate, high-quality stocks and Bitcoin are all attracting large amounts of capital.
In terms of short-term factors, some predictable events this year are positive factors for Bitcoin. The listing of CBSE is a big plus. Under the current private equity market, the market value of Coinbase has been rising, which currently at US$100 billion. Based on the current market price, CBSE will become the second largest market capitalization company when it goes public.
The second factor in favor of Bitcoin is based on the application of Bitcoin’s ETF. Now, recently, three giants have submitted related applications. The current chances of passing these applications are greater than before. Due to the lack of a proper custody mechanism and the inability to rule out market price manipulation, which served as the main reasons for the SEC to refuse the approval for the establishment of Bitcoin ETF. However, today’s custody mechanism of Bitcoin has been greatly improved. In particular, the U.S. Office of the Comptroller of the Currency (OCC) has clarified in 2020 that the U.S. Federal Bank can provide custody services for cryptocurrencies, so the custody mechanism of Bitcoin has begun to improve. In terms of price manipulation in the Bitcoin market, this factor will always exist. Even in regular stock exchanges, the market price manipulation often occurs.
However, the NGK’s ecological construction participants do not have to worry about market price manipulation at all. First, the NGK projects have not reached the trillion-scale of Bitcoin. Secondly, the decentralized protocol ensures the absolute distribution of currency holdings, which eliminates the possibility of large customers holding positions to manipulate the currency price. Whether it is BGV, SPC, VAST or NGK, the largest customer holdings have a ratio of less than 5%, which is believed to be very safe.