PANews reported on August 6 that according to The Block, the cryptocurrency market showed signs of a tentative recovery after the violent market turmoil on Monday, when more than $1 billion of leveraged cryptocurrency positions were liquidated and the value of major tokens fell sharply by up to 20%. Coinbase researcher David Duong said that market conditions on Tuesday showed the possibility of a short squeeze amid increased trading activity on centralized exchanges. Duong said: "We believe that the market will remain volatile in the short term, but shorts may be squeezed here, which could lead to a market rebound in the next few days." Currently, the liquidation of long and short positions in cryptocurrencies in the past 24 hours is roughly equal. According to Coinglass data, as of the time of writing, of the total liquidation of $425 million, about $212 million was long positions and slightly more than $212 million was short positions.

Coinbase researchers stressed that specific factors are still influencing the cryptocurrency market. Duong added: "Genesis distributed Bitcoin and Ethereum in kind in its bankruptcy liquidation plan. The unwinding of the yen carry trade may also affect the decision of Mt. Gox creditors to receive Bitcoin at this time."

Duong also said that the recent decline in the cryptocurrency market does not represent the beginning of a new long-term trend or market cycle. "The current correction in the cryptocurrency market does not represent the beginning of a new market cycle. Instead, the current sell-off is consistent with our defensive strategy in the third quarter of 2024 and a more constructive outlook for the fourth quarter of 2024, although the strength of this move tests our conviction," Duong said.