market situation
On July 5, the crypto market experienced another big dive, with Bitcoin falling to about $54,000 and many altcoins even falling below the lows of the 2022 bear market. According to Coingecko data, the global cryptocurrency market value has fallen below $2.1 trillion, down 7.81% in the past 24 hours.
Bitcoin selling pressure and macroeconomic uncertainty
The direct cause of the decline is that Bitcoin is facing a lot of selling pressure, while the fundamental reason is the unclear expectations of interest rate cuts at the macroeconomic level. It is still unknown when the market will turn around.
major factor
Mt.Gox creditors repay BTC
Mt.Gox incident: This is a mine that has been buried for more than ten years and now it has finally exploded.
On May 28 this year, the Mt.Gox exchange, which had been bankrupt for ten years, began to transfer a total of 141,685 bitcoins, worth about US$98 billion, causing market panic.
On July 5, Mt.Gox began to pay Bitcoin and Bitcoin Cash (BCH) to creditors, with the amount of compensation being 13% of its holdings that year.
Mt. Gox also holds 141,686 bitcoins, accounting for 0.72% of the total circulating supply of bitcoin. The analysis points out that if these bitcoins are sold, the price may fall to $47,000.
German and US government selling
The German government holds 45,624 bitcoins and has transferred more than $425 million worth of bitcoins in less than a week since June 25.
The U.S. government sent 3,940 bitcoins to the Coinbase Prime wallet on June 26, 2024.
Miners sell off
After the halving, miners’ income dropped sharply, many inefficient miners were forced to exit the market, and Bitcoin computing power declined.
In the past two months, the total computing power of the Bitcoin network has dropped by 15%. Miners have stepped up their selling efforts, becoming one of the biggest selling pressures in the market.
Since 2024, Bitcoin miners have sold more than 50,000 Bitcoins in total, and the Bitcoin reserves held by miners have fallen to an all-time low.
Institutional buying slows
The craze for Bitcoin spot ETFs has brought about a wave of institutional buying.
Since June, Bitcoin spot ETF funds have been experiencing large outflows most of the time.
Macroeconomic expectations weaken
On June 12, the Federal Reserve maintained the federal funds rate between 5.25% and 5.5%, predicting that it might cut interest rates only once this year, lower than the previous forecast of two times.
Market Outlook
It takes time to digest the selling pressure
If the market is to recover, the Fed's interest rate cut is the key. From the current situation, the market is mainly affected by information, and the entry of macro liquidity is the most direct way to improve it.
Impact of the US election
As the election approaches, Trump and Biden's attitudes towards cryptocurrencies may affect the market. Trump chose crypto figures as his assistants and publicly attended the Bitcoin Miners Conference, while Biden also contacted crypto-related people. These actions show the importance of the crypto industry in the election.
Short-term market
In the short term, the market has bottomed out. The price of Bitcoin has fallen to the shutdown price of some mining machines, which usually indicates a staged bottom. In addition, the USDT premium is also high, showing the market's bottom-hunting sentiment.
Risks and opportunities
It should be noted that there is still great uncertainty in the short-term market. Mt.Gox's compensation has just begun, and creditors may have to wait up to three months to receive Bitcoin or BCH repayments. If the development of Bitcoin spot ETFs does not meet expectations, the market may fall further.
In a falling market, it may be possible to build positions in mainstream currencies with higher certainty, such as Bitcoin and Ethereum, in batches to prepare for possible market rebounds in the future.
