On April 18, cryptocurrency markets experienced a sudden and sharp downturn, with Bitcoin dropping over 10% in a matter of hours. The decline triggered a broad sell-off across digital assets, leading to massive liquidations in leveraged positions. According to data from AICoin, over $3.9 billion in BTC positions were liquidated within 24 hours across major exchanges including OKEx, BitMEX, and Bybit.
The market turmoil quickly gained traction on social platforms, trending on Weibo and topping Zhihu’s hot topics list. Public sentiment remained divided—while some viewed the crash as the collapse of a “Ponzi scheme,” others saw it as a healthy correction following prolonged bullish momentum, presenting a strategic opportunity to accumulate assets.
Possible Causes Behind the Bitcoin Crash
Several theories have emerged to explain the steep decline, though not all hold up under scrutiny.
Coinbase Insider Sales: Overblown Narrative?
One widely circulated explanation pointed to insider selling following Coinbase’s recent direct listing. Reports indicated that executives sold millions of shares shortly after going public. Data from Capital Market Laboratories and Coinbase’s investor relations confirmed that insiders offloaded approximately 12.97 million shares, valued at over $4.6 billion based on the closing price of $344.38.
Notably, CFO Alesia Haas sold her entire stake of 255,500 shares at $388.73 per share, while CEO Brian Armstrong sold nearly 750,000 shares in multiple transactions, netting around $292 million. However, this represented only about 2% of his total holdings, suggesting a measured exit rather than a fire sale. A Coinbase spokesperson clarified that these sales were part of pre-arranged trading plans and did not reflect a loss of confidence in the company.
Regulatory Fears: U.S. and Turkey in Focus
Another trigger cited was a tweet from FX Hedge claiming the U.S. Federal Reserve would sue financial institutions involved in crypto-related money laundering. However, this claim was quickly challenged by Jake Chervinsky, General Counsel at Compound, who noted that anti-money laundering prosecutions fall under the jurisdiction of the Department of Justice—not the Fed—and that such investigations are typically confidential.
Meanwhile, Turkey’s central bank announced a ban on the use of cryptocurrencies for payments starting April 30, citing financial stability concerns. While the news broke on April 16, Bitcoin held above $60,000 until the crash. The restriction prohibits both direct and indirect crypto transactions and bars electronic money institutions from facilitating transfers to crypto platforms.
Despite short-term bearish pressure, analysts suggest the ban could have a counterproductive long-term effect—driving more Turks toward decentralized alternatives amid ongoing lira inflation. Chainalysis reported that Turkish crypto trading volume reached 218 billion lira between early February and late March, underscoring strong domestic demand.
Market Indicators Signal Potential Buying Opportunity
CryptoQuant’s S2F Reversion model—a variant of the popular Stock-to-Flow metric—showed a sharp drop during the crash, falling to 1.827. This indicates a growing divergence between actual prices and model predictions, which historically have correlated with market bottoms.
While the S2F model previously forecasted Bitcoin reaching $100,000, the current reversion may signal undervaluation. Some analysts interpret this as a contrarian buy signal, especially given the lack of fundamental deterioration in network activity or adoption metrics.
At the Super Computing & Convergence: 2021 Global Blockchain Computing Power Conference in Chengdu—hosted by Bitmain and BTC.com—industry leaders expressed calm confidence. Miners and mining firms largely dismissed the dip as routine volatility.
Mining Sector Remains Resilient
Dong Zhen, head of investment at Shanghai-based Wuyi Mining, highlighted three key reasons why now could be an ideal time to enter the mining sector:
- Lower Energy Costs: The upcoming hydroelectric "flood season" in Sichuan and Yunnan provinces is expected to reduce electricity costs by up to 50%, significantly improving profit margins.
- Bullish Price Outlook: Despite volatility, institutional inflows and limited supply (only ~900 BTC mined daily) support long-term price appreciation.
- Controlled Hashrate Growth: While Bitcoin’s price surged 4–5x from 2020 lows, network hashrate grew only 30–40%, indicating sustainable expansion without overheating.
These factors suggest mining remains economically viable even during price corrections.
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China’s Evolving Stance on Cryptocurrency Regulation
At the Boao Forum for Asia 2025, Deputy Governor of the People’s Bank of China (PBOC) Li Bo addressed cryptocurrency regulation, confirming that China is actively studying rules for digital assets.
Li emphasized that Bitcoin and stablecoins are not currencies, but alternative investment assets—a classification shared by many global regulators. He noted that while current oversight is minimal, a formal regulatory framework is under development to mitigate systemic risks from speculation.
“Any stablecoin aiming to become a widely adopted payment tool must face stringent regulation—equivalent to banks or quasi-banking institutions,” Li stated.
Former PBOC Governor Zhou Xiaochuan echoed caution, urging alignment between digital assets and real economic activity. Reflecting on the 2008 financial crisis, he warned against financial instruments detached from tangible value—such as shadow banking or speculative derivatives—that amplify systemic risk.
Regarding digital currency progress, Li confirmed that China’s central bank digital currency (CBDC) has no fixed launch date. Instead, authorities will continue expanding pilot programs, strengthening infrastructure security, and building legal frameworks—all aimed at facilitating international trade rather than challenging the U.S. dollar’s dominance.
Industry Response: Embracing Regulation for Long-Term Growth
Many crypto industry insiders welcome regulatory clarity, acknowledging short-term challenges but viewing it as essential for sustainable development. Clear rules can reduce uncertainty, attract institutional capital, and prevent illicit use—key steps toward mainstream adoption.
As global regulators refine their approaches—from Turkey’s restrictive stance to China’s cautious research phase—the need for compliant, transparent platforms becomes more urgent.
Frequently Asked Questions (FAQ)
Q: Is Bitcoin really just an investment asset and not real money?
A: According to PBOC officials, Bitcoin lacks legal tender status and functions primarily as an alternative investment rather than currency. Its value derives from market demand and scarcity, not government backing.
Q: Could Turkey’s crypto ban actually boost Bitcoin adoption?
A: Yes—historically, restrictive policies in high-inflation economies often drive citizens toward decentralized assets as stores of value, potentially increasing grassroots demand despite official bans.
Q: What makes the S2F Reversion model significant?
A: It measures deviations between actual prices and those predicted by scarcity-based models. Sharp drops may indicate oversold conditions and potential reversal points.
Q: How does China’s CBDC differ from Bitcoin?
A: The digital yuan is centralized, state-issued, and designed for monetary policy efficiency. Bitcoin is decentralized, supply-capped, and operates independently of any government.
Q: Are miner profits sustainable during price crashes?
A: Miners with low operational costs—especially those using renewable energy during peak seasons—can remain profitable even when prices drop significantly.
Q: Will increased regulation kill crypto innovation?
A: Not necessarily—well-designed regulations can enhance trust, reduce fraud, and encourage institutional participation without stifling technological advancement.
Core Keywords: Bitcoin crash, cryptocurrency regulation, mining profitability, stablecoin oversight, digital yuan, market correction, S2F model