On Friday (December 20th), Bitcoin's price fell below the $98,000 mark, now quoted at $95,672.2, with a daily decline of 2.36%. Over the past 24 hours, more than 300,000 people globally faced liquidation due to the Bitcoin crash, with the total amount exceeding $1 billion. This sharp decline occurred following a Federal Reserve meeting, heightening market risk-aversion sentiment, further exacerbating the downward pressure on Bitcoin prices.
Market Sentiment and Speculative Risks
This year Bitcoin has hit record highs, with its total market value surpassing $2 trillion, sparking market frenzy. However, economists warn investors to beware of a potential repeat of the "Internet bubble." David Rosenberg, president and chief economist of Rosenberg Research, pointed out that amid a sluggish global economy, the overheating of stock and Bitcoin trading is especially pronounced, viewing it as part of a massive bubble.
Prominent economist Peter Schiff has gone further to state that Bitcoin is "the biggest bubble in history," even surpassing the Internet bubble of the late 1990s. He notes that the current market value of Bitcoin exceeds the total market value of about 400 defunct companies at the peak of the Internet bubble, issuing a strong warning.
Liquidation Wave Sparks Panic
The liquidation wave over the past 24 hours further demonstrates the high risk of market speculation. Data shows that many investors suffered significant losses due to leveraged trading, including both retail and institutional investors. Industry insiders believe that the current market's high volatility stems mainly from emotional trading and a lack of consensus on the future of cryptocurrencies.
Experts Urge Cautious Investment
Even though supporters of cryptocurrencies firmly believe Bitcoin will maintain its status as a long-term store of value and investment tool, the recent price volatility has led many economists to reiterate warnings of a bursting bubble. Rosenberg indicated that the rapid rise of Bitcoin's price is detached from its value base, posing a significant risk of correction once the speculative frenzy cools.
Peter Schiff also emphasized that the current Bitcoin craze is more a reflection of market mania rather than economic or technological fundamentals. He cautions investors to remain highly vigilant against this speculative "musical chairs" game.
Future Outlook
As skepticism about Bitcoin continues to rise, future price uncertainty may increase further. On one hand, recognition by institutional investors provides some support for Bitcoin; on the other hand, the global economic environment, regulatory policies, and market sentiment could all become crucial factors affecting Bitcoin prices. Investors should exercise caution when engaging in the cryptocurrency market to avoid major losses due to market fluctuations.
