Jessy, Golden Finance
On July 5, the crypto market experienced another big dive, with Bitcoin falling to around US$54,000, and more altcoins have even fallen below the lows of the 2022 bear market.
As Bitcoin continues to fall, altcoins have suffered panic selling. According to data from Coingecko, the global cryptocurrency market value has now fallen below $2.1 trillion, with a change of -7.81% in the past 24 hours.
The direct cause of this decline may be the massive selling pressure on Bitcoin, while the fundamental reason is the uncertainty of interest rate cuts at the macroeconomic level. When will the market turn around?
Selling pressure is high and macro expectations are weakening
The serial liquidation of leverage has begun. Since yesterday, many whales’ positions have been liquidated. In the past 24 hours, the crypto market has been liquidated for about $700 million. The decline is rapid and continues to break everyone’s bottom line. In fact, from June to now, the major factors affecting the decline in the market have basically not changed, which are roughly as follows:
1. Mt.Gox begins repaying BTC to some creditors
The Mentougou incident was a mine that had been buried for more than ten years and it has finally exploded.
On May 28 this year, the cold wallet account of Mt.Gox, a bankrupt exchange for ten years, began to transfer out a total of 141,685 bitcoins, which were worth about $98 billion at the time, triggering a panic in the market. These BTC will be released to creditors between July and October.
On July 5, Mt.Gox began to pay compensation to creditors. Japanese creditor @VoiceOnFate posted a message on X today, saying that he had received BTC and BCH compensation from Mt.Gox through a designated exchange platform, and the amount of BTC paid was 13% of the account's holdings that year.
On July 5, Mt.Gox's transfer records included a transfer to Bitbank Exchange
Mt.Gox lost about 750,000 bitcoins belonging to its users at the time, and currently holds 141,686 BTC, accounting for 0.72% of the total supply of bitcoin in circulation. If all these coins are paid to creditors, it is believed that there will be a greater selling pressure on Bitcoin. Some analysts pointed out that if most of these bitcoins are sold, the price of Bitcoin will fall to around $47,000.
(For more information on the selling pressure caused by the Mt. Gox compensation, please refer to "Galaxy Research Director: Mt. Gox is about to pay BTC. How much selling pressure will it bring?")
2. The German and US governments are selling Bitcoin
The German government holds 45,624 bitcoins, and in less than a week starting from June 25, it transferred more than $425 million worth of bitcoins to transactions.
In addition to the German government, governments of the United States, Britain, China, Ukraine and other countries all hold large amounts of Bitcoin.
According to on-chain data, the US government also sent 3,940 bitcoins to the Coinbase Prime wallet on June 26, 2024.
3. Miners sell off
After the halving, miners' income dropped sharply. Due to the deterioration of income, many inefficient miners were forced to choose to exit the market, and the Bitcoin computing power dropped sharply. 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 have also increased their selling efforts recently, becoming one of the biggest selling pressures in the market. At present, miners are more focused on short-term interests. 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 ever.
4. Institutional purchases slowed down
The current market liquidity is insufficient.
The core factor that boosted the rise of Bitcoin this time is undoubtedly the Bitcoin spot ETF. Matrixport once published that institutional investors including asset management companies, investment advisors, pension funds and sovereign wealth funds are buying Bitcoin spot ETFs. The rapid influx of institutional funds has led to a surge in demand for Bitcoin, and the price has soared.
However, this consensus has been challenged recently. Since June, funds in the Bitcoin spot ETF have been in a state of large outflows most of the time.
5. Macro expectations weaken
At the monetary policy meeting on June 12, the Federal Reserve maintained the target range for the federal funds rate unchanged at 5.25% to 5.5%. Based on the published dot plot of the rate hike path, Federal Reserve officials predicted that the median federal funds rate will fall to 5.1% by the end of 2024, which means that there may be only one rate cut this year, which is less than the previous forecast of two times.
Will there be another rate cut this year? At present, it seems more likely that there will be no rate cut.
How will the market outlook look like?
If the market is to rise in the future, the Fed's interest rate cut is definitely fundamental. From the current situation, the market's growth is basically dominated by information, and the most direct improvement is the entry of macro liquidity.
Another thing worth looking forward to is the US election. As the election approaches, the crypto war between Trump and Biden is intensifying. The "crypto industry" has also become a bargaining chip for politicians to win over voters. First of all, Trump has been active, choosing crypto figures as his crypto assistants for the election, publicly speaking at the Bitcoin Miners Conference, etc. Biden also attended the Bitcoin Roundtable meeting and contacted crypto-related people. The game between the two sides is undoubtedly good for the crypto industry. The benefits of the game can be seen from the sudden approval of the Ethereum spot ETF.
From this perspective, interest rate cuts and the US election are actually long-term positive for the crypto industry.
In the short term, the market has actually reached its bottom. First of all, Bitcoin has fallen to the shutdown price of some mining machines. Falling to the shutdown price generally indicates that it has reached its bottom.
USDT premium is also high at present. According to OKX data, the current over-the-counter price of USDT has risen to 7.38 yuan, while the USD/CNH exchange rate is 7.29 yuan. Generally, USDT premium is caused by a large amount of buying. At present, everyone is in a strong mood to buy at the bottom.
However, it should be noted that there is still great uncertainty in the short-term market. First of all, it takes some time to digest the selling pressure. For example, the compensation of Mentougou has just begun. The Ethereum spot ETF has not yet landed. If the subsequent development of the spot ETF does not meet market expectations, the market will further fall.
However, in a falling market, it may be possible to build positions in batches in some mainstream currencies with higher certainty, such as Bitcoin and Ethereum.
