The crypto world is never short of heat, but this time, the focus has completely shifted to 'decline'—and it's a nearly catastrophic waterfall-like drop.
On June 18, Beijing time, the price of bitcoin fell below the $20,000 mark for the first time since December 2020; worse still, the decline did not stop, as it later reached a low of $17,601, while also setting a record for the longest '12-day consecutive decline' since its inception in 2009, breaking years of historical data in the crypto space.
The plunge is not a 'one-man show' for bitcoin. According to Coindesk (a bitcoin news source), the second-ranked cryptocurrency by market capitalization, Ethereum, fell nearly 11% in a single day on June 18, closing at $975.24, dropping to its lowest level since January 2021. As the two leading cryptocurrencies in the market, both have cumulatively dropped nearly 70% from their historical highs in November 2021—when bitcoin reached its peak price of $69,000 each.
The crash has resulted in a collective 'liquidation wave' among investors. According to Coinglass data, as of 8 a.m. on June 19, over 124,000 investors in the entire cryptocurrency market were liquidated within the past 24 hours, with a total amount reaching $459 million, equivalent to about 3.083 billion RMB. For the vast majority of investors, the essence of 'liquidation' is almost synonymous with 'losing all capital'.
Clearly, with such devastating 'power', why do people still rush into the crypto space? The answer may lie in those enticing 'wealth-generating phrases'.
If we take 2010 as the starting point—when an American programmer used 10,000 bitcoins to buy 2 pizzas, corresponding to a bitcoin price of only $0.0025—over the past more than a decade, the price curve of bitcoin can be described as a 'miracle', demonstrating an unprecedented and enormous increase. Even more striking is that it has also given rise to the richest Chinese: in November 2021, when bitcoin reached a high of $69,000 (about 460,000 RMB), Zhao Changpeng, the founder of the cryptocurrency exchange 'Binance', saw his wealth soar to $95.9 billion (about 610 billion RMB), directly surpassing Li Ka-shing and Zhong Shanshan, becoming the new richest Chinese.
It is worth noting that Zhao Changpeng's 'Binance' achieved a profit of $200 million in just six months, and he himself completed in just a few years what would take other billionaires decades to accumulate—this is why the saying 'one day in the crypto world is like a year in the human world' has gained such widespread attention.
In contrast, 'stock god' Warren Buffett accumulated over 90% of his wealth after the age of 60, and for a long time, his wealth growth seemed 'slow'. According to the logic that 'making money is the hard truth', those who made money at some point in bitcoin naturally look down on Buffett's style of 'wealth accumulation'—after all, the core difference between 'becoming rich' and 'getting wealthy' lies in one being 'fast' and the other 'slow'.
The short-sighted pursuit of quick profits often leads people to abandon their originally clear investment logic. In fact, most investors are well aware that cryptocurrencies, including bitcoin, cannot be evaluated using classic valuation models. In traditional value systems, the value of an asset depends on the cash returns it can generate (numerator) and the required rate of return by investors (denominator): for instance, hens can lay eggs, businesses can generate income, bonds can pay interest and principal, but the logic of cryptocurrency appreciation is 'self-reinforcing'—the more it rises, the more people buy; the more buyers, the more scarce it appears; the more significant the profit effect, which in turn attracts more people to enter the market.
For this reason, Buffett stated last year that he was 'unwilling to spend $25 to acquire all bitcoins', even though at that time the price of a single bitcoin had already exceeded $38,000. Cryptocurrencies are essentially just 'price symbols', existing solely due to trading. As economist Paul Krugman said: 'If speculators collectively become doubtful and suddenly worry that bitcoin could be worthless, then bitcoin really could become worthless.'
It is undeniable that conventional investments may lead to 'wealth', but the efficiency is likely far inferior to the 'getting rich' speed of cryptocurrencies. But the market's iron law is 'profits and losses share the same source': when you treat the crypto space like a casino, the market will treat you like a gambler—there are always moments of wild celebration where money flows in, but there will also always be days of bubble bursts and messy liquidations.
