In the ups and downs of the crypto market, it is important to understand the reasons behind them. This article will analyze the key factors behind the recent market crash, including the German government's Bitcoin sell-off and the Mt. Gox compensation incident.
Bitcoin market drops sharply
Recently, after hovering above $60,000 for many days, the price of Bitcoin began to fall rapidly, falling below $58,000 and $57,000 after lunch, reaching a low of $56,952, a two-month low. Similarly, the price of Ethereum also fell from $3,300 to $3,126. This round of decline caused the entire crypto market to fall, and only a few non-stablecoin assets rose on the Binance USDT market.
German government sells off massive Bitcoin
Earlier this year, German police seized 50,000 bitcoins in a case of copyright violation in 2013. These bitcoins began to be sold in June, with a total of about 9,600 sold, and 40,359 remaining. The specific selling schedule is as follows:
June 19: 6,500 sold
June 25: 400 transferred to the exchange, 500 transferred to other addresses
June 26: 750 tokens transferred out
July 1: 400 tokens were transferred to the exchange, and 282.74 tokens were transferred again
July 2: 361.877 transferred to Flow Traders
Today: 1,300 transferred to exchanges, 1,700 transferred to anonymous wallet addresses
Mentougou Compensation Incident
The compensation issue of Mentougou has always been the focus of market attention. On June 24, the pressure of compensation of 142,000 BTC and 143,000 BCH caused market panic, causing the price of BTC to fall to $60,000. According to the latest news, Mentougou has conducted a small test transfer today. Although large-scale compensation has not yet officially started, the market has begun to fall sharply in advance, reflecting investors' concerns about future selling pressure.
The Impact of Bitcoin Spot ETFs
As an important data indicator of the market's buying and selling orders, the Bitcoin spot ETF has also performed poorly in recent days. On July 3, the total net outflow reached $20.4495 million, which was the first net outflow in the past five days. From historical data, when ETF funds have a net inflow, the price of Bitcoin tends to rise; conversely, net outflows lead to price declines. In May, the price of Bitcoin rose due to net inflows, but after entering June, funds began to flow out significantly.
Future market outlook
QCP Capital said in its market analysis that Bitcoin's break below the $60,000 support level, accompanied by signs of miner capitulation, could mean a bottom in prices. Historically, similar declines in computing power have often heralded the formation of a market bottom. In addition, despite the severe sell-off in the overall crypto market, the options market remains optimistic about the performance in the coming months, especially for Ethereum call options expiring in September and December.
expert's point
QCP Capital believes that as the selling pressure on Bitcoin intensifies, and factors such as the Mentougou compensation, miner selling and government regulation affect Ethereum, it may see a stronger rebound due to the upcoming spot S-1 filing. However, Andrew Kang, co-founder and partner of Mechanism Capital, is more pessimistic. He pointed out that most market participants have failed to fully realize the severity of the possible decline in Bitcoin's 4-month volatility range, and a more extreme correction to the $40,000 range may occur.
In the current market environment, investors need to pay close attention to key factors affecting the market, such as the German government's selling action and the progress of compensation in Mentougou. At the same time, the flow of funds of Bitcoin spot ETFs should be closely tracked to judge the buying and selling strength of the market. Although the market faces many uncertainties, investors should adjust their investment strategies in a timely manner according to market changes to cope with possible fluctuations in the future.
