Original｜Odaily Planet Daily (@OdailyChina)
Author: Wenser (@wenser 2010 )
As if it weren't raining, the crypto industry has once again reached its "darkest hour" - OKX market data shows that the price of Bitcoin fell to $52,199 this morning, and is now trading at around $53,136, a 24-hour drop of more than 10%; the price of Ethereum fell below $2,100 to $2,084.69, and is now trading at around $2,344, a 24-hour drop of more than 20%.
After the Bitcoin spot ETF and Ethereum spot ETF were approved and put on the market, the crypto industry was affected by many factors, including the world's political and economic situation, the US economic development and market expectations, and the industry's own development conditions. Odaily Planet Daily will sort out and interpret this sharp market decline in this article.
Analysis of macro factors: Heavy losses in the US, Japan and South Korea, disputes in the Middle East, political and economic changes in the US
At a time when the world economic system is increasingly connected, especially after Bitcoin spot ETF and Ethereum spot ETF were launched on the U.S. stock market, the crypto industry has become a part of the economic system and is greatly affected by macro factors. Specifically, this decline may be due to the following main reasons:
The crypto industry has become a "subsidiary" of the U.S. stock market: the U.S. stock market fell by 1.3 crypto markets overnight
On August 2, the U.S. unemployment rate in July was 4.3%, 0.2% higher than expected, the highest since October 2021; the seasonally adjusted non-farm payrolls in the United States in July were 114,000, and the expected 175,000, the smallest increase since April 2024. After triggering Sam's Law (that is, if the average unemployment rate for three consecutive months is higher than 0.5% a year ago, the U.S. economy will enter a recession), U.S. stocks immediately ushered in a "huge drop" the next day-
On the evening of August 3, due to concerns about a global economic recession, the U.S. stock market evaporated $2.9 trillion in market value, marking the biggest drop since the COVID crash in 2020.
At that time, the total market value of cryptocurrencies was about 225 million US dollars, which was equivalent to a drop of nearly 1.3 crypto markets in the U.S. stock market.
A look at the day's declines in U.S. stocks
The U.S. stock market was closed for the next two days, but "bad news" from related companies continued to come: Berkshire Hathaway, which ranks 11th in total market value, increased its cash holdings by nearly US$90 billion in Q2 and reduced its holdings of Apple shares by nearly 50%; Intel announced the largest layoff in the company's history, and it is expected to lay off about 15% (about 15,000 to 17,000) of its employees, and will stop paying dividends from Q4 2024 until the company's cash flow improves. Its stock price plummeted by nearly 20% after the market; Nvidia's new artificial intelligence chip will be delayed by at least 3 months due to design defects, affecting many U.S. companies such as Meta, Google, and Microsoft.
In addition, the Japanese stock market also suffered heavy losses: the Topix index triggered the circuit breaker mechanism downward, and has fallen 20% from its July high, falling into a technical bear market; government bond futures triggered the circuit breaker mechanism; Japan's 10-year government bond yield fell to 0.785%, down 17 basis points on the day; the Nikkei index has fallen by more than 2,900 points, with a drop of 8.17% today. The Korean Stock Exchange Index (KOSDAQ) also triggered the circuit breaker mechanism after a sharp drop of 8%.
The situation in the Middle East is turbulent: the conflict between Iran and Israel, the conflict between Palestine and Israel, and the attack by Hezbollah in Lebanon
After the assassination of the leader of Hamas not long ago, the political situation in the Middle East has once again undergone tremendous changes.
On August 4, U.S. and Israeli officials predicted that Iran would launch an attack on Monday; Hamas said it would re-identify the organization's new leader and said that the organization is continuing to work effectively and has the ability to persist in resisting Israel under the most difficult circumstances.
On August 5, according to AXIOS, the United States informed the G7 that Iran might attack Israel within the next 24 hours; in the early morning of August 5, local time, Hezbollah in Lebanon announced that it had used multiple drones to attack the headquarters of the 91st Division of the Israeli Army in Ayelet HaShahar. Hezbollah said the attack was a response to assassinations and attacks by the Israeli army in multiple locations in southern Lebanon.
US political situation: Harris versus Trump, the future of US politics is uncertain
The US election is in full swing, but in the past week Harris has surpassed Trump to become the "hottest presidential candidate" - on August 2, the Trump campaign announced that it had raised $138.7 million in July. In comparison, Harris' campaign announced that it had raised a record $200 million in 7 days (two-thirds of which came from first-time donors). The battle between the Republican and Democratic parties continues, further exacerbating market concerns about the political and economic situation in the United States.
Crypto industry turmoil: Jump Trading, Gemini, and on-chain liquidations
In addition to the impact of traditional financial fields and macro factors, the crypto industry has also ushered in a new round of "cleansing", mainly from the following aspects:
Jump Crypto: Another FTX?
The latest news, according to Lookonchain monitoring, Jump Trading, a subsidiary of Jump Crypto, is selling 120,695 wstETH ($481 million), and has sold 83,000 wstETH ($377 million) since July 24, leaving 37,604 wstETH ($104 million). In June, market news said that the U.S. Commodity Futures Trading Commission (CFTC) launched an investigation into Jump Crypto. BitMEX co-founder Arthur Hayes posted that a "big guy" was disposed of and was selling all crypto assets. The community speculated that it might refer to Jump Crypto (founded in September 2021).
According to Scopescan monitoring, after checking Jump Crypto's Binance deposit address, it has deposited $91 million in ETH since last Friday.
Gemini Lianchuang: Is everything okay?
This morning, Cameron Winklevoss, co-founder of the well-known American exchange Gemini, suddenly posted a message saying, "everything is fine."
At a time when the market is falling sharply, it is unclear whether this statement is suggesting that Gemini has solved a major problem or is intended to boost industry confidence.
Gemini Joint Venture Tweets
On-chain liquidation wave: Ethereum is the hardest hit area
On August 2, an investor was liquidated 1,688 ETH, equivalent to approximately US$5.06 million, due to a drop in market prices.
Today, another round of liquidations came as the market fell sharply:
20,500 AAVE were liquidated from the 0x 790 c address, equivalent to approximately $2 million.
0x47ab address was liquidated with 89.43 WBTC (worth $5.28 million) and 2,790 cETH (worth $156,760);
The 0x9cbf address was liquidated with approximately 14.63 WBTC (approximately US$867,650) and 6,880 AAVE (approximately US$680,430);
Ethereum long whale 0x ac 4 e has been liquidated 7, 467.5 WETH (worth about $22.3 million);
A whale named 0x 1111 has been liquidated with approximately 6,230 WETH (worth $19.6 million);
Ethereum long whale 0x99e8 has been liquidated with approximately $21.5 million in cryptocurrencies, including 5,730.5 WETH and 108,500 cETH;
0x 4446 address has been liquidated 167,740 cETH, worth $9.12 million;
The 0x6646 address was liquidated with approximately $8.7 million in crypto assets, including 9.48 WBTC and 2,000 ETH;
2,269 WETH worth $5.7 million were liquidated from the address 0x 0 b 5 a.
According to DefiLlama data, Ethereum had an on-chain loan liquidation quota of approximately US$33.6 million around US$2,101, and an on-chain loan liquidation quota of approximately US$91.4 million around US$1,959.
Market views at a glance: one-sided bearish sentiment vs. bullish sentiment
There are different opinions on the recent sharp fluctuations in the market:
Unemployment sparks cryptocurrency sell-off
In response to the recent decline of Bitcoin, Dan Dolev, senior analyst at Mizuho Securities, said that Bitcoin is not yet the safe-haven tool that people hope for. If the unemployment rate rises and people lose their jobs, investors will have to cash out their tokens.
Matthew Graham, founder and managing partner of Ryze Labs, said that several factors are affecting the price of Bitcoin in the short term, including the possibility of lower interest rates, the possibility of Trump's victory in the upcoming election, and the potential impact of the Harris administration's reform of cryptocurrency policy. The market is keenly evaluating the possibility and potential consequences of such a policy shift.
US stock ETFs record largest single-day outflow in nearly 3 months
On August 2, the U.S. spot Bitcoin ETF saw its largest single-day outflow in more than 90 days (more than 60 trading days) since May 1, with a total outflow of US$237.45 million on that day, which was also the fourth highest single-day outflow since the launch of the spot Bitcoin ETF in January.
10x Research: Bitcoin could fall to $42,000
Well-known crypto research institution 10x Research published an article stating that it expects the $55,000 support line to fall below, which could push the price down to $42,000. In this case, Ethereum could fall below $2,000. Although slightly extreme, economic weakness, continued weak market structure, on-chain data, and cycle analysis indicate that there will be further pressure in the future.
The Japanese Yen and Ethereum became the leading forces of the decline
Hayden Hughes, head of cryptocurrency investments at family office Evergreen Growth, said digital assets were part of the victims of the unwinding of yen carry trades as speculators adjusted to higher interest rates in Japan. "These investors are also dealing with a sharp increase in hedging costs caused by fluctuations in the dollar-yen exchange rate." Justin D Anethan, head of business development for Asia Pacific at market maker Keyrock, said the decline in the cryptocurrency market was led to some extent by Ethereum, which was affected by the news that Jump Crypto was suspected of selling Ethereum-related assets.
One man, many troops: Circle CEO becomes a minority
Circle co-founder and CEO Jeremy Allaire said in a post on X: “I am as bullish (on the crypto industry) as I was six weeks ago. Focus on technology, industry, and adoption. In the face of global macro fluctuations, don’t pay attention to the price of digital commodities unless you are just trading.”
Summary: Bitcoin and Ethereum have gone through multiple tests, it is too early to buy the bottom
According to CoinGecko, the total market value of cryptocurrencies has fallen below $2 trillion and is currently at $1.95 trillion; Bloomberg said that Bitcoin recorded its largest weekly drop since the collapse of FTX, and its gains so far this year have fallen to around 34%; ETH experienced its biggest drop since 2021, once wiping out all gains so far this year.
Now that we have gone through the above multiple tests, it may be too early to say that we are buying at the bottom.
