After June 18th, July 5th brings another round of relay, and the cryptocurrency market sees another round of washout.
On July 5th, Bitcoin, defending the 60,000 support battle, failed to hide its decline. After dropping below the key level of 58,000 in the afternoon session, it continued to slide, touching $53,363.32 at one point, now hovering around $54,000, down 7.13% in the past 24 hours, returning to late February levels. Ethereum followed closely, dropping below $2,900 to $2,868, a decrease of 8.62% in 24 hours. Beyond major currencies, most altcoins, which were thought to have already hit rock bottom, saw a general decline of 20%.
According to Coinglass data, as of 2:21 PM, liquidations in the past 24 hours reached $683 million, predominantly from long positions, with long liquidations amounting to $590 million and short positions less than $100 million, indicating a one-sided market trend.
Returning to June 18th, Bitcoin was still hovering around 64,000 to 66,000, its major support levels. Within just half a month, it has plummeted to the 55,000 range. What exactly happened in the market? Will there be further bottom fishing or timely retreat?
From the events, there hasn’t been a significant change in Bitcoin’s overall narrative. Discussions about ETFs and miners persist, with long-term prospects heavily reliant on macroeconomic expectations, yet none of these have made significant progress.
In terms of macroeconomic expectations, although the market generally supports a rate cut in September, the Federal Reserve’s stance remains unclear. Minutes from their meeting indicated participants believe inflation is moving in the right direction, but not fast enough to warrant rate cuts. On July 2nd, Federal Reserve Chair Jerome Powell, speaking at the ECB Forum in Sintra, Portugal, reiterated that recent inflation pressures have eased, but more data is needed before deciding on rate cuts.
ETF data shows lukewarm performance. Despite the market’s continuous decline, ETFs actually saw net inflows for five consecutive working days starting from June 25th, only turning to outflows on July 2nd and 3rd, both inflows and outflows in the range of $20 million, insufficient to significantly impact the market.
In the mining sector, miners continue to sell off. Over the past week, miners have sold over $150 million worth of BTC, although the volume of sales has noticeably decreased, corresponding hash rates are gradually recovering, and the miner capitulation effect is diminishing.
However, due to these factors, the fundamental issue of Bitcoin’s short-term liquidity shortage remains unresolved. Against this backdrop, short-term narratives and market trends are more susceptible to sharp fluctuations, as evidenced by today’s July 5th events.
Over the past two weeks, two major events relevant to the market have occurred. Firstly, the German government’s BTC sales, and secondly, the compensation process in Mentougou.
As early as January this year, the German government announced the seizure of nearly 50,000 BTC, worth about $2.1 billion, during an investigation into the movie2k pirated streaming platform. The subsequent movement of this large amount of BTC by authorities in Saxony caused a stir in the market. According to German regulations, certain federal states are required to immediately sell confiscated assets. However, due to ongoing discussions and divisions over asset management, this massive stash has remained relatively quiet.
By June, movements in these funds began to emerge. Starting from June 19th, Germany began selling Bitcoin, with 6,500 BTC sold on the first day, followed by smaller transfers. On July 4th, the German government transferred another 1,300 BTC to exchanges and moved 1,700 BTC to anonymous wallet addresses. In approximately two weeks, Germany has sold about 9,400 BTC, holding a current position of 41,774 BTC. Today, at 3 PM, the German government transferred another 500 BTC to a new address starting with 139P, valued at approximately $27.07 million.
Similarly, Mentougou added fuel to the bearish sentiment. As early as June, before formal compensation began, announcements from Mentougou indicated that repayments would start in early July, emphasizing non-disruptive sales. However, due to panic, potential sell-offs of up to 140,000 BTC nearly pushed Bitcoin below the 60,000 mark in early July. On July 4th, the Arkham platform showed that Mentougou had conducted test transfers. On July 5th, according to PeckShieldAlert, an address receiving 47,200 BTC from Mt. Gox transferred funds to two new addresses, with 44,500 BTC going to an address starting with 16ArP3 and approximately 2,700 BTC to an address starting with 1JbezD.
Beyond these two events, the U.S. government and rumors of mysterious Eastern powers have also been drawn into the maze. On June 27th, over $240 million worth of BTC was transferred from a private wallet to the Coinbase platform. Of particular interest were wallets associated with institutional traders. According to blockchain data, these Bitcoins were seized by the U.S. government from drug dealer Banmeet Singh in 2024, with subsequent plans for sale remaining unclear. Subsequently, the U.S. government addresses sporadically transferred out 248 BTC and 3,375 ETH, sparking rumors of government sell-offs.
While traces of the U.S. government’s actions can be followed, rumors surrounding Eastern mysterious forces remain speculative. Market reports suggest that a provincial authority in China has been selling BTC over the past week, totaling 11,000 BTC, with more than half already sold and an average daily selling volume of 1,000 BTC. Despite uncertain authenticity, blockchain data confirms significant whale movements.
Considering actual sell-offs, Germany has sold less than 10,000 BTC in half a month, with no signs of movement from the U.S. government and only a few thousand from Eastern powers. Mentougou’s initial impact remains within manageable limits. Exchange data also supports this, showing that as of 8 AM this morning, the amount of BTC transferred to exchanges was relatively low, even lower than a week ago.
However, today’s significant decline underscores the ongoing issue of liquidity shortage. Especially on July 5th, amidst the U.S. Independence Day holiday period, market liquidity is already low, exacerbated by sell-offs that Wall Street struggles to absorb. This has fueled widespread market panic and a spiral of decline, with long-term holders taking advantage of the situation to sell, leading to pronounced selling pressures.
Social media has amplified panic. On cryptocurrency forums, while overseas media generally favor positive price discussions, sentiment analysis by Sentiment shows mentions of selling have significantly outweighed those of buying in the last 24 hours.
Analyzing the attribution, the question remains: what will be the future market trend? Should investors buy the dip or take profits as they come? Analysts still hold divergent views on this.
eToro market analyst Josh Gilbert believes that current bearish news outweighs bullish indicators, expecting Bitcoin’s price to further deteriorate in the coming days, with short-term weakness testing $50,000 or even lower, and $52,000 becoming a critical battleground between bear and bull markets.
Markus Thielen from 10x Research also supports this view, suggesting prices could drop to $50,000 in the coming weeks, warning that “as support levels are breached, sellers will seek liquidity, potentially accelerating sell-offs.”
Yet, many traders remain optimistic, believing that the bottom price has been reached. A notable event signaling this is the approaching end of miner capitulation, with Bitcoin prices at $54,000, where only five miner models, including Antminer S19, are profitable, potentially indicating a localized bottom. Dovey Wan, partner at Primitive Crypto, also remarked: “Bitcoin miners are on the verge of capitulation. The breakeven point for S19 is $52,000, which is a perfect position for a local bottom.”
From an event perspective, it’s undeniable that bearish news continues. In Germany’s case, despite calls from lawmakers to halt sales to reduce market risk, sales are likely to continue in line with German regulations and operational guidelines. Sun Yuchen has directly called for off-market purchases of German BTC on the X platform, seemingly more for marketing purposes. As for Mentougou, repayment of some creditors in Bitcoin and Bitcoin Cash began today. Trustees have reiterated in announcements that payments will be made through designated cryptocurrency exchanges according to the compensation plan.
Returning to the core issue, the current scale of sell-off is not particularly large, with the main cause being insufficient buying power. Data shows that only 35,000 BTC were accumulated on exchanges in the past 24 hours, a volume that in 2021 would have been consumed in a single day during the bull market, or in a few days a few months ago, but now may take over three weeks to absorb.
On the other hand, price declines during the Asian trading session, the main phase of non-U.S. hours, have occurred multiple times in this cycle and are expected to further reduce liquidity over weekends. However, according to this speculation, when the U.S. trading session, the main power period, arrives, purchasing power is expected to rapidly increase, potentially curbing the current downward trend in the short term.
Prior to that, the focus will be on non-farm data. According to the schedule, the U.S. Department of Labor is set to release the June non-farm payroll report at 20:30 Beijing time tonight. According to the median of economist expectations compiled by industry media, non-farm employment is expected to increase by 190,000 in June, with the unemployment rate remaining unchanged from the previous month at 4%.
The unemployment rate will
