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Bitcoin is not in danger yet, is this the best way to prevent the next terrible flash flash crash?

The chaos seen in the stock market for weeks has sent shockwaves across almost all markets, leading to Bitcoin and other digital assets reporting unprecedented losses for days. and last week.

This intense global recession has been fueled by the corona virus pandemic, causing fear among investors, creating panic selling panic.

Today, however, the US stock market was able to increase by 10% after President Trump declared a state of emergency, releasing a significant amount of funding to help states and cities curb the rapid spread. quickly of this deadly virus.

This rebound has also helped Bitcoin partially offset losses, although analysts remain cautious about being too excited about any kind of medium-term trend reversal.

Bitcoin is currently trading at $ 5,428, up sharply from the daily low in the $ 3,800 area set during the crypto market crisis yesterday.

Will rising stocks push Bitcoin higher?

While the recovery of traditional financial markets will undoubtedly prove beneficial for Bitcoin, it is important to note that analysts are still warning of the current excitement.

Analyst Josh Rager talked about this in a recent tweet, believing it is too early to grow in the cryptocurrency market, as the chaos caused by the Corona virus may still be at an early stage.

"Basically, the President has made a speech to do pump 7% stock in the last hour but not yet price hike on cryptocurrency market. MA long way to go for sure COVID19 Spread all around the world. We expect to continue to fluctuate during this time (short-term neutral). "

The markets can maintain the momentum of today or not when reopening on Monday will tell the long-term importance of this ongoing upward move.

Circuit breakers can prevent further problems

The cryptocurrency market has witnessed unprecedented chaos, with many coins recording a 40% drop in hours. And while the bad thing seems to be over, at least when it comes to Bitcoin, the sudden market downturn has sparked industry-wide debate about how to prevent this from happening again.

To prevent further incidents in the cryptocurrency market, Multicoin Capital's managing partner Tushar Jain proposed a bold solution: creating an industrial alliance that implements circuit breakers.

However, while the suspension mechanism of trading like the stock market can curb losses when trading, many people see this as going against everything that cryptocurrencies set out – a move that last together will cause centralization and regulation of the market.

Circuit breakers are commonly used in the US stock market but have never been used on cryptocurrency exchanges. Born after the Black Monday stock crash in 1987, when nearly all major exchanges fell more than 20% in a day, circuit breakers were a mechanism to prevent trading during times of sharp price drops.

Most circuit breakers are triggered when the closing price of the asset recorded the previous day drops by 7, 13 and 20%. The breaker will suspend trading for 15 minutes to prevent further declines and allow traders to re-evaluate their position. However, the interrupt cannot guarantee that the deterioration will stop.

According to Tushar Jain, a managing partner at Multicoin Capital, the implementation of circuit breakers for the cryptocurrency market will prevent greater losses.

Focusing on decentralized markets may not be the best solution

Jain said that the cryptocurrency market was “disrupted” because it had suffered more than 50% loss. This is a strong reason to implement circuit breakers across the industry.

"The price change of today is in world Cryptocurrencies are one reason strong to establish the set industry-wide circuit breaker. Cryptocurrency markets have broken down and top exchanges need to work together to stop them disaster repeat”.

Professor Emin G眉n Sirer tweeted on March 12:

Crypto needs circuit breakers. Every market needs circuit breakers to slow down negative bot interactions. Exchanges Going down under load is the version of the circuit breaker electronic money ".

The huge losses that ETH incurs, causing its price below $ 100 to nearly bring down the entire DeFi market. Jain tweeted:

“Much trader can not to send money to the trading platform fast enough to transact due to blockchain congestion & extreme volatility then gets worse. "

He argues that if the entire market of accepting coins could be reduced by up to 60% in a day, that would significantly limit the usefulness of the technology that underpins them. Exchanges are motivated to see the market grow, which is why they should have mechanisms in place to pause trading when things get tough.

However, Jain's bold proposal met severe criticism. Most say that this would disrupt the core principles of blockchain and suffer the loss of transactions as personal responsibility.

Tom Lombardi, director of VC Financial Wave, said:

“Combination important center between exchanges is a form of censorship. "

You can see the price of Bitcoin here.

Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Minh Anh

Bitcoin Magazine

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