$3,800!
After plunging from over $7,000 to just above $5,000 yesterday afternoon, Bitcoin unexpectedly hit a new yearly low—plunging over 40% in 24 hours.
Although prices have begun recovering and are now hovering near $5,000, market sentiment remains extremely nervous.
According to data from Contract Emperor’s market report: Over the past 24 hours, the global derivatives market saw $3.424 billion in liquidations across all contracts, affecting 122,238 traders. The top three cryptocurrencies by liquidation value were BTC ($2.487 billion), ETH ($323 million), and BCH ($189 million).
As of now, aside from Bitcoin, ETH dropped from a high of $182 yesterday to a low of $91—a staggering 50% decline; BCH fell from $255 to $133, down 47%; and BSV plunged from $181 to $88, a 51% drop…
Within just one day, the total market capitalization of the entire cryptocurrency market collapsed—from roughly $228 billion a few days ago to under $120 billion—shrinking by nearly $100 billion, or almost halved.
Some pessimistic participants claim the bull market is dead, Bitcoin will inevitably go to zero, and the industry faces massive restructuring; others remain optimistic, believing that after such a sharp correction, a strong rebound is inevitable—and that Bitcoin still has upside potential in 2020.
What exactly triggered Bitcoin’s latest crash? Where is it headed next? And what impact will this have on the broader industry?
To answer these questions, DeepChain interviewed multiple industry insiders, aiming to help readers better understand current market dynamics and future trends.
「This crisis serves as a wake-up call」
Liu Changyong, Founder of Zhimi University
The primary cause behind Bitcoin’s plunge is the outbreak of a global economic crisis and the resulting liquidity crunch.
Cryptocurrencies and blockchain have been integrated into mainstream finance since 2017, becoming part of Wall Street investment portfolios. As a result, their previous role as a hedge against traditional financial risk has vanished—instead, due to their relatively small market cap and valuation being largely driven by expectations, they’ve become even more volatile than mainstream assets.
It’s deeply regrettable that cryptocurrencies have transformed from rebellious challengers of traditional finance into mere playthings of the traditional financial system.
This crisis serves as a wake-up call—we must reevaluate the direction of cryptocurrencies.
Rationally assess oversold conditions caused by panic—don’t capitulate and dump holdings out of fear. For those seeking investment opportunities, carefully differentiate among various crypto assets’ fundamentals and long-term prospects before building positions rationally.
「The bankruptcy wave has only just begun」
Yi Lihua, Founder of LD Capital
The crash was primarily driven by macroeconomic factors: amid the pandemic, stock markets across Europe and the U.S. have plummeted, causing broad-based asset depreciation—including Bitcoin, which many hold as part of their diversified portfolios. Second, many investors are forced to liquidate positions—whether for daily expenses or to cover mining electricity costs. Third, weak inflows into Bitcoin exacerbated panic-driven selling.
This is a true butterfly effect—the wave of bankruptcies has only just begun. Cherish the present moment and prioritize risk management.
Staying alive is paramount—regardless of what assets users hold, always retain a portion of cash, cash, cash!
In my view, further declines will trigger massive industry consolidation—many companies will shut down, including miners, most mid- and small-sized exchanges, project teams, and third-party service providers and media outlets.
「A Bitcoin price starting with “3” is indeed highly attractive」
Shi Daye, CMO of BibiCoin
This historic market move left me stunned.
In my view, two key factors contributed to this downturn:
1. External economic conditions have deteriorated sharply due to the pandemic and oil market turmoil. As a major commodity class, Bitcoin inevitably suffers collateral damage.
2. Technically speaking, each bearish wave typically unfolds in three phases—with the third leg often being the largest and most dangerous.
Additionally, I believe the likelihood of another sharp crash in the short term is extremely low. After such an epic market event, all participants need time to rest—bulls to rebuild confidence, bears to digest their gains.
Bottoms aren’t shouted into existence—they’re formed by price action.
I recommend that spot traders begin accumulating positions gradually. After all, Bitcoin and other major cryptocurrencies priced in the $3,000 range are genuinely attractive.
For the general public: “Be greedy when others are fearful, and fearful when others are greedy.” This principle applies universally across all investment domains.
Recall December 2017—or even just one month ago—when everyone felt confident Bitcoin would reach new all-time highs. Now, fear dominates the market. Indeed, trading tests human nature above all else.
As an industry practitioner, I consistently adopt a “crypto-native” mindset—extending the time horizon further. Bitcoin’s deflationary nature and unique commodity attributes guarantee its intrinsic value far exceeds $6,000.
Because blockchain cannot exist without tokens—and certainly not without Bitcoin.
「No signs of stabilization yet on current charts」
Crypto Analyst Kuai Dong
Bitcoin is, after all, a liquid asset—meaning that during periods of severe real-world panic, people instinctively seek safety through cashing out.
Unlike gold—which hedges against volatility in other assets—Bitcoin only demonstrates true value when systemic banking failures occur or fiat currencies collapse. So far, banks—having learned lessons from the 2008 financial crisis—have strengthened risk controls. Yet during large-scale panic events, liquid assets (including Bitcoin) inevitably face widespread sell-offs of varying magnitudes.
During this downturn, while large whale sell-offs initially triggered the decline, investors engaged in collateralized lending and quantitative trading further fueled the downward momentum. The market capitalization wiped out in this sharp, short-term drop was unprecedented in history—leading to widespread forced liquidations of collateralized assets. Even several DeFi projects suffered severe debt defaults following this crash, delivering a long-term blow to the industry.
Looking ahead, in my view, there are currently no signs of stabilization on the charts. Due to insufficient data, it remains impossible to determine precisely where the bottom lies. The optimal strategy at present is to maintain hedging positions or remain flat, waiting for clear signs of stabilization before attempting to re-enter the market.
For the industry as a whole, however, this represents an excellent new opportunity. Whether in mining, exchanges, wallets, or fund management firms, a major reshuffling is underway—signifying a reallocation of wealth. Some enterprises or individuals we haven’t yet anticipated may emerge as new industry stars once the sector recovers. What practitioners must focus on now is how to survive—and ensure they’re fully prepared for the next decade.
「 Bitcoin and U.S. Equities Show Correlation Recently」
Bi Laoye, Founder of Self-Media Platform “Bi Laoye”
I originally believed yesterday’s crash was primarily driven by cascading leveraged liquidations. Looking back from the prior consolidation range, the average entry price for the earliest long positions in the market was around $7,000. A 10% drop would liquidate some undercollateralized longs; another 10% decline would wipe out most of those who had added margin. Thus, I estimated Bitcoin’s bottom near $5,550.
However, today’s situation appears more consistent with large institutional participants in crypto being forced to dump Bitcoin indiscriminately due to leverage collapse in U.S. equities. From a distribution perspective, selling near the top during subsequent choppy rebounds helps raise the average exit price—suggesting even major players have succumbed to panic amid this sharp decline.
In my view, Bitcoin has recently exhibited strong correlation with U.S. equities.
If Bitcoin serves as the benchmark index for the crypto market, then U.S. equities function as the global risk-asset benchmark index.
We are currently witnessing a massive U.S. equity market crash. If U.S. equities have not yet completed their correction—or if upcoming Federal Reserve stimulus measures fail to meaningfully revive them—Bitcoin will likely continue adjusting downward in tandem, until reaching a balanced equilibrium zone, similar to the ~$3,000 level seen at the end of 2018.
I believe this magnitude of decline presents an opportunity for tactical “bounce-trading” once the crash stabilizes—for example, after a long lower wick followed by a high-volume reversal candlestick, and several subsequent bullish candles.
Nonetheless, I still consider the bottom highly uncertain.
We’ve certainly witnessed lower Bitcoin prices historically—but such rapid, steep declines over a short timeframe remain exceptionally rare.
This crash will trigger mass retirement of outdated mining hardware and widespread DeFi liquidations—but the crypto ecosystem will endure. While some dominant capital exits, new capital will inevitably flow in to participate. We may simply need another prolonged bottom-building phase akin to 2019.
Also, given the depth of this decline, the exchange rates between major altcoins and BTC remain misaligned—so avoid rushing to buy altcoins prematurely.
Bitcoin—or cryptocurrencies more broadly—holds theoretical potential to mitigate or resolve financial crises. Though that capability does not yet exist, it would require broader adoption, higher market capitalization, and greater liquidity to materialize.
Yet within the crypto market itself, this remains a fiercely dynamic, unregulated space—where market makers can dump or pump at will, creating and destroying wealth alike. In essence, it’s a speculator’s paradise—a characteristic that makes it vastly superior to China’s heavily regulated A-share market, and one that gives it distinct advantages even versus U.S. equities. Therefore, I believe it will continue attracting more participants going forward.
「 China Will Become the Top Global Safe-Haven Destination for Capital」
Zhang Hongbin, Founder of Denghuo Capital
I bought a small amount of spot Bitcoin at $7,500—and got stuck immediately. The move truly caught me off guard.
Currently, my exposure across the cryptocurrency space is quite light—and I’m significantly more bullish on the A-share market going forward.
In my view, the root cause of this downturn is the global economic crisis—prompting investors worldwide to liquidate assets and hoard cash.
It’s not just crypto—the entire financial system, including U.S. equities, is falling.
The A-share market may fare relatively better. Personally, I believe China will become the world’s premier safe-haven destination for capital.
「 Avoid Altcoins Entirely」
Da Shouzi, Senior Trader & Cryptocurrency Derivatives Trader
The overall macro environment across global financial markets is deteriorating. U.S. equities have already experienced two circuit-breaker events—and compounded by the global pandemic, Bitcoin’s near-term outlook remains bleak.
Recent consecutive crashes have nearly halved Bitcoin’s price; last night’s single-day drop exceeded 30%, and another sharp decline occurred early this morning—causing altcoins to hit new all-time lows. This situation may even surpass the severity of China’s 2017 “94” regulatory crackdown.
Bottom-fishing requires extreme caution. Although bottoms are always relative—not absolute—this zone remains highly dangerous, and a deep V-shaped rebound is unlikely in the short term.
My personal recommendation is to avoid altcoins entirely. Neither of the past two minor bull runs lifted altcoins meaningfully—so consider selectively accumulating major coins, but timing remains critical.
True bottoms require broad participation—including market makers—to establish meaningful accumulation zones. So waiting until then to enter isn’t too late; assets like ETH, EOS, and BCH could be accumulated in tranches at that stage.
Regarding the crash’s impact:
First, for traders: the vast majority lose money during such crashes—and without monetary incentives, most will exit the market entirely.
Second, for exchanges: declining user activity and reduced crypto market热度 translate into sharply shrinking revenues—smaller exchanges may not survive this crash.
Finally, blockchain-related institutions and enterprises may face a harsh winter—given the current grim outlook across the entire digital asset market.
Note: The views expressed herein represent solely the personal opinions of the guests and do not constitute investment advice. Cryptocurrency markets carry risks—invest with caution.