On July 5, the price of Bitcoin (BTC) took a "big dive", falling below the $54,000 mark at one point, with the largest drop exceeding 8%, falling to its lowest level since February this year. Major currencies such as Ethereum (ETH) and Solana (SOL) also saw a drop of about 10%, and the market was in mourning.
Possibly influenced by the latest news of slowing non-farm employment growth in the United States, which boosted expectations of a rate cut by the Federal Reserve, the price of Bitcoin rebounded slightly on July 6. As of press time, the latest price of Bitcoin was US$56,536.17, up 4.83% on the day.
"As a new type of asset, cryptocurrencies such as Bitcoin have extremely high price volatility and lack effective supervision and protection mechanisms." Cao Zhe, chief investment officer of Avenir, told the China Times reporter that investors should carefully assess their risk tolerance and understand the risks of the cryptocurrency market to avoid blindly following the trend and excessive speculation.
The black swan from ten years ago brought the market crash again
The price of Bitcoin has fallen by more than 20% in the past 30 days, and its daily trading volume has also dropped by 32% during the same period.
Regarding this round of decline, An Guangyong, an expert from the Credit Management Committee of the All-China Mergers and Acquisitions Association, told the China Times reporter that Bitcoin prices often experience sharp rises and falls, mainly because of its relatively small market size, limited liquidity, and lack of a stable regulatory framework, making it easily affected by market sentiment, news events, and large transactions.
"Crypto investors face huge market volatility risks," said An Guangyong. Investors should reasonably control their investment positions and appropriately diversify their investments to reduce risks based on their own risk tolerance. They should pay close attention to the regulatory policies of various countries on cryptocurrencies and adjust their investment strategies in a timely manner. They should use safe wallets and trading platforms to prevent technical risks and hacker attacks.
The market generally believes that the selling pressure of Mt.Gox’s compensation is one of the main reasons for this sharp drop. Mt.Gox’s creditors have been waiting for more than ten years, during which time the price of BTC has soared by more than 10,000%.
Wallet data tracked by the Arkham platform showed that on July 4, the Mt. Gox wallet conducted a test transaction, transferring a total of $25 worth of Bitcoin to different wallets through three transactions. On July 5, according to PeckShieldAlert monitoring, the address that received 47,200 BTC from Mt. Gox transferred the funds to two new addresses.
The repayment of Mt.Gox has just begun, and it is still unknown what the creditors will do next. At the same time, the German government has taken frequent actions recently, further exacerbating the panic in the market.
In January this year, the German government announced that it had seized nearly 50,000 BTC from suspects in the process of investigating the pirated website streaming platform movie2k, worth about $2.1 billion. Starting on June 19, the wallet that saved the stolen money began to sell Bitcoins one after another, and sold 6,500 BTC on the same day; on July 4, the wallet transferred another 1,300 BTC to Bitstamp, Coinbase, Kraken and other exchanges, and transferred 1,700 BTC to an anonymous wallet address. On the afternoon of July 5, the wallet transferred another 500 Bitcoins to a new address, worth about $27.07 million.
Despite the massive transfer, the German government still holds more than 4,000 BTC, worth about $2.3 billion. In response to the impact of the German government's sell-off, TRON founder Justin Sun posted on social media: "I am willing to negotiate with the German government to purchase all Bitcoins off-site to minimize the impact on the market."
Arkham data shows that currently, multiple governments hold a large amount of Bitcoin, totaling about $17.8 billion. Among them, the US government holds the largest share of Bitcoin, about $12 billion; the British government holds about $3.3 billion worth of Bitcoin; El Salvador has $314 million worth of Bitcoin.
The pressure on miners has also made the market worse. Affected by the halving, the income situation has deteriorated, and many inefficient miners have been forced to choose to exit the market, and the Bitcoin computing power has dropped significantly. OKLink data shows that the Bitcoin network computing power has dropped by 15% from the peak in the past two months, and has been in a state of continuous decline in the past week.
As computing power declines, miners are also selling Bitcoin. According to IntoTheBlock data, Bitcoin miners have sold more than 50,000 Bitcoins since 2024, and the Bitcoin reserves held by miners have gradually dropped to the lowest level in history. Data shows that in the previous week alone, miners have sold Bitcoin worth a total of US$150 million.
A report released by CryptoQuant pointed out that for most of the time since the halving, Bitcoin miners' transaction fee income has dropped to only 3.2% of total daily income, the lowest share in three months. After insufficient incentives, miners began to shut down underperforming equipment and began to sell Bitcoin to hedge risks.
In addition to the above reasons, the listing of Ethereum spot ETF in the US market has not been smooth. The market originally expected that the product would be approved on July 4, but to this day, there is still no relevant news.
"This sharp drop may be just the beginning, and Bitcoin may fall further to $50,000." 10xResearch analysts predicted. The agency's data showed that Bitcoin's buying flow decreased, while selling flow accelerated, indicating that a downward trend may occur in the coming months.
eToro market analyst Josh Gilbert also supports this view. He believes that the current negative news far outweighs the positive news. It is expected that the price trend of Bitcoin will further deteriorate in the next few days. In the short term, the price will be relatively weak and will test $50,000 or even lower. $52,000 will be the key battlefield between the bear market and the bull market.
Andrew Kang, co-founder of crypto venture capital firm Mechanism Capital, is more pessimistic. He believes that Bitcoin may experience an extreme correction to the $40,000 range.
Investors need to pay attention to multiple risks
The risks in the crypto market are never just about price fluctuations. On July 5, a report released by blockchain intelligence company TRM showed that the amount of cryptocurrencies stolen through hackers and network vulnerabilities more than doubled in the first half of this year to $1.38 billion. Among them, five large attacks accounted for 70% of the stolen cryptocurrencies.
The report shows that hackers mainly steal cryptocurrencies by obtaining encrypted strings such as private keys and seed codes. The largest attack this year occurred on the Japanese exchange DMM Bitcoin, with more than $300 million worth of bitcoins stolen, more than 4,500 tokens. At present, the cause of the attack has not yet been determined.
According to the mid-year phishing report released by Scam Sniffer, 260,000 victims lost $314 million across the EVM chain in the first half of 2024. Compared with the $295 million stolen last year, this figure was reached in just six months this year.
In addition to security issues, the direction of regulation is always an important factor affecting the crypto market. At present, the whole world is paying attention to the US election. Geoffrey Kendrick, head of foreign exchange and digital asset research at Standard Chartered Bank, said that if Biden continues to participate in the US presidential election, the market will believe that this situation is conducive to Trump's victory. Then the price of Bitcoin is likely to hit a new high in August and will exceed $100,000 by the US election day. But if Biden withdraws from the presidential election at the end of July, this may cause the price of Bitcoin to fall to $50,000. He said that if Biden's Democratic candidate successor looks more reliable than Biden, the price of Bitcoin will remain weak.
"There are many risks in investing in Bitcoin." Yu Jianing, president of Uweb and co-chairman of the Blockchain Committee of the China Communications Industry Association, said in an interview with a reporter from the China Times that market risk is one of the main considerations. Bitcoin prices are extremely volatile and may be affected by many factors, such as changes in market sentiment, the macroeconomic environment, and policy and regulatory changes.
"Investors need to be prepared to face dramatic price fluctuations in a short period of time." Yu Jianing said that regulatory risks should not be ignored. Globally, regulatory policies on digital assets are still evolving, and any new regulatory measures may have a profound impact on the Bitcoin market. In addition, technical risks, security risks, and fraud risks are also important factors to consider when investing in Bitcoin. During the storage and trading of digital assets, hacker attacks, system failures, or other technical problems may occur, resulting in asset losses.