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Why is Bitcoin at a negative premium (why is Bitcoin falling and all currencies falling)

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Why Bitcoin Negative Premium

Why Bitcoin Negative Premium Bitcoin prices have been in a negative premium state, experiencing a sustained downturn between December 2017 and early 2019. In January 2018, the price of Bitcoin reached an all-time high of $20000

The bull market in 2018 attracted people’s attention because of the sharp fluctuations in the overall Cryptocurrency market. At that time, the price of Bitcoin had fallen below the 10000 dollar threshold. But as time went on, Bitcoin began to rebound and showed a strong rebound, currently breaking the 40000 integer mark. So why is this trend happening? Let’s take a look at the reasons:

1. Cryptographic assets are facing serious economic uncertainty; 2. Due to regulatory instability leading to a decrease in trading volume (including transaction fees), traders must invest their funds in encrypted assets to make the entire industry healthier; 3. Because encrypted assets have a certain level of liquidity and risk, some people may believe that encrypted assets have great speculative value; 4. Bitcoin is a highly speculative commodity and financial tool. Compared to traditional assets, Bitcoin is relatively novel, and one of its main characteristics is the lack of liquidity

Why Bitcoin has fallen All currencies have fallen

Editor’s note: This article is based on data and is authorized to be reprinted by the Daily Planet.

What is the reason behind the significant decline in Bitcoin and the subsequent decline in other currencies? First, the continued decline of the DeFi market has led to a sharp decline in investors’ interest in Ethereum, leading some people to believe that Ethereum will become a good hedging tool; Secondly, many DeFi protocols have experienced significant vulnerabilities, attacks, and forks, such as Uniswap’s governance token UNI, which suffered losses from hackers stealing billions of dollars worth of funds due to the failure to implement liquidity mining incentives But in fact, these issues have not been completely resolved, as most encryption assets are constantly collapsing However, if all digital currencies are viewed as an investment product, then they are speculative assets, essentially a gamble. So we can conclude that if the price of Bitcoin skyrockets to over $10000 (i.e. over $10000), then all counterfeit coins will experience a similar situation, and even many new projects will be born – such as the decentralized exchange Curve (CRV) and the BoredApeYachtClub issued by NFT platform YugaLabs. Finally, in order to persuade people to buy Bitcoin and gain more profits, two reasons need to be considered:

First, the Ethereum ecosystem is developing rapidly

Second, because it has the largest number of community users, its activity on the Ethereum blockchain is far lower than that on the Ethereum network The third reason is that its transaction cost is relatively low; Fourthly, ETH2.0 is currently in progress Currently, the price of ETH has dropped below $1000, but ETH2.0 has not been implemented and there has been no large-scale user migration as previously expected. In addition, there is another major influencing factor – the performance of smart contracts

From a certain point of view, the network congestion of Ethereum is not good, but as more and more people enter the Ethereum network, the transaction costs of Ethereum also rise In addition, in the past few months, the trading volume of various DEX has sharply increased

Of course, for those who want to buy goods with Ethereum token, they still have a lot of options. For example, there are a large number of liquidity providers (LP), Stablecoin and DeFi projects on the Ethereum network, and the most attractive one is the DeFi application.

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