People in the cryptocurrency circle have their own 618.
After a week of decline, the market shook again on June 18. In the early morning, Bitcoin fell below the market support price of $65,000, and Ethereum followed suit, falling below $3,400, with a 24-hour drop of 6.23%. The king of MEME, SOL, also fell to 127.22 USDT, a drop of 10.98%.
Mainstream coins are still bleak, and it is even more difficult to say that altcoins are improving. Altcoins generally show a "numb" market, with most altcoins falling by more than 20%. The newly launched ZK once fell below 0.2USDT, a drop of more than 36%. According to Coinglass data, as of 2 pm yesterday, the entire network had a 24-hour liquidation of US$318 million, mainly long positions, with long orders liquidated more than US$270 million. Affected by this, the crypto market value has shrunk again, falling to a minimum of US$2.46 trillion.
Although Bitcoin has recovered to over $65,000 today, the market is still pessimistic in the face of such a market situation. Just a few months ago, the general consensus in the market was that Bitcoin would reach $100,000 by the end of the year and the bull market would take off. This makes people wonder, what happened?
Comparing the results and reviewing the market, it is actually difficult to avoid the issue of attribution, but if we only discuss the current decline in Bitcoin, it ultimately comes down to insufficient liquidity.
The core factor that boosted the rise of Bitcoin this time is undoubtedly the Bitcoin spot ETF. The rapid influx of institutional funds has led to a surge in demand for Bitcoin, causing Bitcoin to soar from $40,000 to $73,000, and ultimately giving Bitcoin consensus key support. However, this consensus has also faced a backlash recently. From June 10 to June 17, Bitcoin ETFs have mostly shown a net outflow, with the outflow reaching $810 million in the past week, and institutional buying momentum has gradually declined.
This sign can also be seen in the turnover rate. The turnover rate on the BTC chain continues to decline, with a 24-hour turnover rate of only 3.91%. The balance of BTC on exchanges is also decreasing. In the past week, the balance of BTC on exchanges has almost reached the historical lowest level. As of June 19, the balance of BTC exchange wallets was 2.4765 million, reflecting poor selling sentiment.
Behind the data performance is the weakening of macro expectations. At the monetary policy meeting on June 12, the Federal Reserve maintained the target range of the federal funds rate at 5.25% to 5.5%, which was in line with market expectations. The published dot plot of the interest rate hike path showed that Federal Reserve officials predicted that the median federal funds rate would drop to 5.1% by the end of 2024, which means that there may be only one rate cut this year, less than the previous forecast of two times. After the remarks came out, the risk market was significantly affected, and the crypto market was the brunt of it, with more than $600 million of digital asset investment products withdrawn.
On the other hand, the so-called "miner capitulation" is also affecting Bitcoin's price trend. After the halving, in view of the continued increase in mining costs, in order to ensure operations and expansion, miners are facing a cash flow crisis. From the performance point of view, recent mining pool transfers, OTC transaction volume surge, and large listed mining companies have significantly reduced their holdings. . On June 11 alone, Marathon Digital, the world's largest Bitcoin mining company, sold 1,200 Bitcoins, setting the largest daily sales volume by miners since the end of March. Looking at June, miners’ Bitcoin OTC balances exceeded 54,000 BTC, reaching the highest level in a year.
Despite the frequent negative news, the data shows that the range of $65,000-69,000 is still the range where the largest number of BTC investors enter the market. Bitcoin is more likely to be reluctant to sell at this price, so it has gained value support. This is also related to the change in holdings. With the entry of high-net-worth holders, short-term gains will not become the main factor affecting sales. In this sense, this kind of concentrated and slightly boring market will continue.
Bitcoin price range investor distribution, source: X platform
Bitcoin has institutional support, but other currencies are not so lucky. In the traditional bull market transmission, the general path is to gradually sink from high-stability assets to low-stability assets, and activate high-yield preferences from low-yield sources, that is, mainstream currencies-altcoins-MEME currencies-other sectors, but this year this path is not as good as before.
The notable feature of this bull market is the siphon effect of liquidity. Large amounts of liquidity have entered the Bitcoin ecosystem, but institutions’ new money has not spilled over to other areas. There are no strong applications emerging in the public chain ecosystem, and the performance of value coins has been poor. Good, but MEME slapped me on the nose.
Token category growth performance this year, source: Binance
The VC tokens that have caused heated discussions this year have also exacerbated this situation. The linear unlocking of VC tokens has led to a surge in selling pressure. After the unlocking period, a large number of tokens have no one to take over. Retail investors have become victims of liquidity, and token prices have further fallen. According to the report of Token Unlocks, it is expected that about $155 billion of tokens will be unlocked from 2024 to 2030, which means that the market needs to increase liquidity by at least $80 billion to absorb it. In the past week, projects such as Aptos, Immutable X, Strike, Sei Network, Arbitrum, and ApeCoin have sold tokens worth $483 million due to large unlocking.
With no innovation in applications, mismatched supply and demand, and limited liquidity, the performance of altcoins has been extremely bleak since March this year. In terms of fair launch and money-making effect, they are not as aggressive as MEME coins, but their value is not as strong as mainstream coins, making them a dilemma for investors. Shenyu has said before that there may be no altcoins in this round of bull market. Affected by the liquidation effect of CRV last week, altcoins were slaughtered again as expected.
In fact, the bull market of market consensus has lasted for more than half a year, but the money-making effect is visibly decreasing. Except for a few retail investors who are lucky enough to hit the vent of MEME, airdrops, and copycat contracts, or those who have won by holding Bitcoin with diamond hands, looking at the wealth distribution in the market, the top exchanges, CeFi, DeFi, and the project parties that previously raised funds and issued coins have gained the most benefits. The weak money-making effect and value differences have exacerbated the current situation of no takeover.
In this context, how to break the situation has become the focus of market discussion. Judging from the current situation, the market's gains are entirely dominated by information. Perhaps the most direct improvement is the entry of macro liquidity. This is why everyone is so concerned about the Federal Reserve's interest rate cut. In fact, after the European Central Bank announced an interest rate cut, encryption has already experienced a small increase, with a significant stimulating effect. However, it is still doubtful whether the liquidity can reach other sectors besides mainstream currencies.
From a macro industry perspective, another possible positive comes from the US election. As the election approaches, the crypto war between Trump and Biden is intensifying. After accepting cryptocurrency donations and making NFTs popular, Trump has been making frequent moves, openly supporting the Bitcoin Miners Conference, posting on social platforms that "I hope all remaining Bitcoins are made in the United States", and saying that he wants to be an advocate for Bitcoin miners in the White House, saying that miners can help stabilize the energy supply of the power grid. Biden has also changed his previous cautious attitude and will participate in the Bitcoin Roundtable meeting for the first time in early July.
The positions of both parties have made cryptocurrencies a political bargaining chip, and thus brought crypto regulation into a new era. Ethereum ETF is a typical example. It has completed a historic reversal in a state of no hope of passing. Consensys recently announced on social media that the SEC has ended its investigation into Ethereum 2.0 and confirmed that ETH has no securities trading charges, which has ushered in a long-awaited rise in the Ethereum ecosystem. According to Bloomberg analysts, the Ethereum spot ETF is expected to be launched before July 2. Compared with the siphoning of Bitcoin, the growth of the Ethereum ETF is more likely to directly stimulate the ecological market, which will also be the most foreseeable positive in the near future.
However, analysts and institutions have different opinions on the analysis of future prices and market conditions.
Unlike the previously recognized bullish sentiment, some analysts believe that the decline will continue after 618. According to Rekt Capital, a well-known cryptocurrency analyst, a BTC price cluster formed near the range high of $71,600, indicating that there is more potential for downward action, and a pullback to below $64,000 may be required to achieve a healthy reset. Trader Titan of Crypto even believes that based on the technical pattern on the monthly chart, Bitcoin may fall below the $60,000 mark on July 1. On-chain analyst Ali also posted on the X platform that historically, Bitcoin generally performs poorly in the third quarter, with an average return of only 6.49% and a median return of -2.57%.
Bitcoin monthly chart. Source: Titan of Crypto
But overall, short-term bearish and long-term bullish are the general views of institutions. QCP Capital, Bitfinex, and 10x all emphasize that BTC will continue to rise, and the consensus of 80,000-120,000 by the end of the year is prominent. Whales seem to hold the same view. Lin Chen, head of Deribit's Asia-Pacific business, revealed on social media that a whale sold a call option of 70,000 at the end of July and entered a call option of 70,000 at the end of the year, totaling 100 BTC and paying 883,000 US dollars, showing that whales have a relatively negative attitude towards price signals in the short term.
For altcoins, the controversy is even more obvious. Quinn Thompson, founder of crypto hedge fund Lekker Capital, believes that in the current context of high leverage and open interest, lack of panic buying, and stagnant stablecoin supply, the best thing to do is not to buy altcoins.
However, Andrei Grachev, co-founder of DWF Labs, believes that as long as Bitcoin remains stable, the next few months will usher in the altcoin market. Arthur Hayes, founder of BitMEX, even wrote on June 7 that it is the best time to buy altcoins. Recently, he even said that the Dogecoin ETF will be passed at the end of this cycle, and emphasized on social media that he is increasing his holdings of PENDLE and DOGE.
In any case, the current market does show a rather boring trend. The more this trend is, the more cautious investors should be. After all, whether it is the project party or the big exchange, they are often the most anxious at this time, and rushing to pay money is not a wise move for any user.
