$SOL Regarding the 'Betrayal of El Salvador', it is actually the case that the El Salvador parliament passed reforms to the 'Bitcoin Law', no longer mandating merchants to accept Bitcoin payments, with taxes limited to payments in US dollars. This event was misinterpreted by some media as 'canceling Bitcoin's legal tender status', triggering panic in the Bitcoin market and a price drop. The warnings brought by the plunge in Bitcoin are as follows:
Warnings for Investors
- Fully understand the risks: The Bitcoin market has a high degree of uncertainty and volatility, with prices capable of significant fluctuations in a short period. Investors should comprehensively understand its market risks, technological risks, etc., such as the potential threats posed by quantum computing technology to cryptocurrency security.
- Reasonable asset allocation: One should not concentrate all funds into a single high-risk asset like Bitcoin; instead, funds should be reasonably distributed across different asset classes, such as stocks, bonds, funds, etc., according to one’s risk tolerance, to diversify risk.
- Maintain rational calm: Do not blindly follow the trend of chasing highs and selling lows, and do not be influenced by short-term market fluctuations and various news. When Bitcoin prices plummet, do not panic and sell; when prices rise, do not greedily chase highs, to avoid making incorrect investment decisions driven by emotional impulses.
- Emphasize regulatory risks: The global regulatory policies on cryptocurrencies are constantly changing, and regulatory uncertainties may affect Bitcoin's trading and prices. Investors should pay attention to regulatory dynamics in various countries to ensure that investment activities are legal and compliant.
Warnings for the Market and Industry
- Market stability issues: Significant fluctuations in Bitcoin prices can affect the stability of the entire cryptocurrency market and may also have spillover effects on traditional financial markets, such as causing declines in blockchain concept stocks in the US stock market, necessitating attention to the linkage risks between the virtual currency market and traditional financial markets.
- The necessity of regulation is highlighted: The decentralized features of the cryptocurrency market pose challenges for regulation. To ensure healthy market development and protect investors' rights, there is a need to accelerate the improvement of the global regulatory framework and standardize market order, such as clarifying Bitcoin's legal status and strengthening regulation of trading platforms.
- Technological security needs improvement: Continuous strengthening of blockchain technology research and development is necessary to enhance the security and stability of Bitcoin and other cryptocurrencies, to respond to potential technological risks such as quantum computing, and to ensure the safety of user assets.
