Author: Gyro Finance

After June 18, July 5 took over and the crypto market once again experienced a cleansing.

On July 5, Bitcoin, which had been defending its 60,000-dollar defense, could not hide its decline. After the midday trading, it fell below the 58,000 integer mark and continued to fall. It hit $53,363.32 during the trading session and is now hovering around $54,000, down 7.13% in 24 hours, and the price has returned to the level at the end of February. Ethereum followed closely behind, falling below $2,900 and now at $2,868, down 8.62% in 24 hours. In addition to mainstream currencies, most altcoins that were expected to fall to the bottom fell again by 20%.

According to Coinglass data, as of 2:21 p.m., the 24-hour crypto liquidation reached $683 million, of which the main liquidation was long orders, with long orders reaching $590 million and short orders less than $100 million, showing a one-sided market trend.

Back on June 18, Bitcoin was still hovering around the main holding support level of 64,000-66,000. In just half a month, it has fallen to 55,000. What happened in the market? Should we buy the bottom and hold on or give in at the right time?

Judging from the events, the overall Bitcoin narrative has not undergone major changes. The topics of ETFs and miners are still there, and in the long run it is highly dependent on macro expectations. There has been no obvious progress on the three.

In terms of macro expectations, although the market supports the view of a rate cut in September, the Fed's direction remains unclear. The minutes of the Fed meeting showed that participants believed that inflation was moving in the right direction, but the speed was not fast enough to lower interest rates. On July 2, Fed Chairman Jerome Powell reiterated at the European Central Bank Forum in Sintra, Portugal that recent inflation pressure in the United States has eased, but more data is needed to prove that inflation risks have passed before deciding to cut interest rates.

ETF data, on the other hand, was tepid. Despite the market’s continuous decline, ETFs actually saw continuous net inflows for five working days starting from June 25, and only started to see outflows on July 2 and July 3. Both inflows and outflows were in the order of $20 million, which was not enough to have a profound impact on the market.

Back to the industry, miners are still selling. In the past week, miners sold more than $150 million worth of BTC, but the selling volume has obviously decreased, and the corresponding hash rate is gradually recovering, and the miners' capitulation effect is gradually subsiding.

Changes in miner exchange wallets, source: Glassnode

But it is precisely because of the above that there is no practical solution to the problem of short-term liquidity depletion surrounding Bitcoin. In this context, short-term narratives and market trends are more likely to cause sharp rises and falls, which is also the main logic of this 7.5.

In the past two weeks, two major events closely related to the market have occurred. One is the German government's sale of BTC, and the other is the start of the compensation process for Mentougou.

As early as 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. At that time, the investigation agency of the German state of Saxony transferred the large amount of BTC in the wallet, which caused a sensation in the market. According to German regulations, some federal states stipulate that the seized assets must be sold immediately, but because the asset handling is still under discussion and division, this huge amount has always remained quiet.

In June, the funds began to move. Starting from June 19, Germany started selling Bitcoins. On the first day, 6,500 BTC were sold. Later, small amounts were transferred out. On July 4, the German government transferred another 1,300 BTC to the exchange and 1,700 BTC to an anonymous wallet address. In about half a month, the German government sold about 9,400 BTC and now holds 41,774 BTC. At 3 pm today, the German government transferred another 500 Bitcoins to a new address starting with 139P, worth about 27.07 million US dollars.

The German government wallet address changed today, source: Arkham

Coincidentally, Mentougou also added fuel to the negative news. As early as June, before Mentougou officially compensated, it issued a notice that it would start to repay in early July. Although it repeatedly emphasized that it would not crash the market at one time, due to panic, the potential selling pressure of 140,000 BTC at that time almost caused BTC to fall below 60,000. In July, Mentougou officially started to act. On July 4, the Arkham platform showed that Mentougou had conducted a test transfer. On July 5, according to PeckShieldAlert monitoring, the address that received 47,200 BTC from Mt. Gox transferred the funds to 2 new addresses, of which 44,500 BTC were transferred to the address starting with 16ArP3, and about 2,700 BTC were transferred to the address starting with 1JbezD.

In addition to these two incidents, the US government and the rumored mysterious Eastern power were also involved in the mystery. On June 27, more than $240 million worth of Bitcoin was transferred from private wallets to the Coinbase platform, especially wallets related to institutional traders. According to blockchain data tracking, Bitcoin was seized from drug dealer Banmeet Singh by the US government in 2024, and it is unclear whether it was sold later. After that, the US government address once again transferred out 248 BTC and 3,375 ETH. For a time, the market quickly set off rumors that the US government was selling.

If the US government still has traces to follow, the mysterious Eastern power can only be considered a market rumor. Market news said that a province in my country is selling BTC in the past week, with a total of 11,000 coins, and more than half of them have been sold, with an average daily selling volume of 1,000 coins. Although the news is unknown, it is true that there are changes in the addresses of giant whales on the chain.

Based on the actual selling pressure, Germany has sold less than 10,000 coins in half a month, the US government has not made any changes, Eastern Power has sold only a few thousand coins, and Mentougou is only in the initial proposal stage. The selling pressure is within the controllable range. The exchange data can also prove this. As of 8 am this morning, the number of BTC transferred to the exchange is quite low, even lower than the data a week ago.

However, the lack of liquidity has undoubtedly once again highlighted the scale of the decline today. Especially today, the United States is in the Independence Day holiday, the market liquidity is already insufficient, and Wall Street's purchasing power is difficult to bear the sell-off, which has caused the spread of market panic and a downward spiral. Long-term profit-makers also took advantage of the situation to sell, and the stampede effect was obvious.

Social media has also exacerbated the panic. In crypto forums, it is politically correct for overseas media to sing the praises of prices rather than pessimism. However, according to Sentiment’s findings, in the past 24 hours, the mentions of selling were much higher than buying.

The attribution can be analyzed, but how should the subsequent market trend develop? Analysts are still divided on whether to buy at the bottom or to stop while the going is good.

eToro market analyst Josh Gilbert believes that the current negative news far outweighs the positive news, and predicts that Bitcoin's price trend 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 and bull markets.

10x Research analyst Markus Thielen also supports this view, believing that a drop to $50,000 could be possible in the coming weeks, and warned that "the sell-off may accelerate as support levels are broken and sellers scramble to find liquidity."

But more traders are still optimistic and believe that the bottom price has been formed. A landmark event is that the capitulation of miners has come to an end. With the price of BTC reaching 54,000, only five mining machine models, including four Antminer models and one Avalon mining machine model, can bring profits to operators, which may mark a local bottom. Dovey Wan, partner of the cryptocurrency fund Primitive Crypto, also said: "Bitcoin miners are only one step away from capitulation. The break-even point of S19 is 52,000, which is the perfect position for the local bottom."

Judging from the incident alone, it cannot be denied that the negative news is still continuing. In Germany, although the parliamentarians unilaterally called for the suspension of sales to reduce market risks, the sales will continue in view of the consistency of German regulations and codes of conduct. In response, Justin Sun also directly called on the X platform, saying that German BTC can be purchased off-site. There is no doubt that this behavior seems to be more for marketing purposes. As for Mentougou, it has notified today that it will begin to repay some creditors with Bitcoin and Bitcoin Cash. The trustee also stated in the announcement again that the repayment will be made through designated cryptocurrency exchanges according to the compensation plan.

However, back to the point, this level of selling pressure is actually not that much, and the direct reason for this is still insufficient purchasing power. According to the data, the BTC accumulation in the 24-hour exchange is only 35,000. This number, back in 21 years, was only the consumption of one day in the bull market. Going back a few months ago, it was only three days, but now, it may take more than three weeks to digest.

On the other hand, the price drop in the main Asian trading period during non-US time has occurred many times in this cycle, and weekends usually bring further liquidity depression. However, according to this speculation, when it comes to the main US time on weekdays, the carrying capacity will increase rapidly, and the downward trend is expected to be curbed in the short term.

Before that, the data that needs to be focused on is the non-farm data. According to the schedule, the U.S. Department of Labor is scheduled to release the June non-farm employment report at 20:30 tonight Beijing time. According to the median forecast of economists compiled by industry media, it is expected that the number of non-farm employment in June will increase by 190,000, and the unemployment rate will remain the same as last month at 4%.

The unemployment rate will be the core focus. Technically, a rise in the US unemployment rate to 4.2% will trigger Sam's Rule. According to Sam's Rule, when the three-month moving average of the unemployment rate rises by 0.5 percentage points or more relative to the low point of the previous 12 months, the US economy will fall into recession. In simple terms, an increase in the unemployment rate indicates that the market is heading towards a recession, and under this pressure, the possibility of a rate cut will increase. If the employment report is positive, the Fed is more likely to maintain its current interest rate policy.

The reason is that the core of the current market is inseparable from liquidity, which has directly led to the so-called grassroots crypto people moving towards macro analysts. In this bull market that looks like a bear market, interest rate cuts seem to be a beacon. But on the eve of the interest rate cut, the last drop of the market is also approaching. Asset management and risk control may be the real beacon for investors.