Original | Odaily Planet Daily
Author | Fu Ruhao
Today at noon, Bitcoin briefly dropped below 54,000 USDT, hitting a low of 53,269 USDT, marking a new low since February 26 this year. It experienced a maximum 24-hour decline of over 10%, and at the time of writing, has rebounded to 54,600 USDT. Altcoins fared even worse with an average decline of around 10%. Real-time prices from OKX are as follows:
– ETH dropped to a low of 2,806 USDT, currently trading at 2,881.61 USDT, with a 24-hour decrease of 8.01%;
– SOL dropped to a low of 120.65 USDT, now at 126.74 USDT, a 24-hour decline of 6.38%;
– PEPE fell to 0.000008221 USDT, currently at 0.000008326 USDT, a 24-hour decrease of 12.58%;
– OP dropped to 1.22 USDT, now at 1.3232 USDT, a 24-hour decline of 13.36%;
– STRK fell to 0.4488 USDT, now at 0.4951 USDT, a 24-hour decline of 15.76%.
According to CoinGecko, the total market capitalization of cryptocurrencies has shrunk to 2.08 trillion US dollars, with a 9% decline in the last 24 hours.
In derivatives trading, Coinglass data shows liquidations totaling 678 million US dollars in the past 24 hours, mostly from long positions, with 588 million US dollars in Bitcoin liquidations and 166 million US dollars in Ethereum liquidations.
Mt.Gox Repayments, BTC Sales by US and Germany, ETF Outflows
This downturn is mainly due to Mt.Gox repayments and Bitcoin sales by the US and German governments.
After multiple small transfers from several Mt.Gox wallets for testing purposes yesterday, this morning Mt.Gox (starting with 1 HeHLv) transferred over 47,228.7 BTC to a new address (starting with 1L7Xbx), valued at approximately 2.71 billion US dollars. Subsequently, this address transferred over 47,200 BTC to two addresses, including:
– 44,500 BTC (2.55 billion US dollars) to the 16 ArP3…VqdF address;
– 2,700 BTC (154.8 million US dollars) to its internal address 1 JbezD…APs 6.
According to on-chain analyst @ai_9684_xtpa, Mt.Gox transferred 1,544 BTC to a new address 1 PKGG…szwzV (valued at 84.87 million US dollars), suspected to belong to the exchange Bitbank. This move signaled Mt.Gox’s ongoing sales, contributing to Bitcoin’s drop to 53,269 USDT. Mt.Gox’s multiple token transfers over the past two days exacerbated market panic over its sales, becoming a major factor in today’s market decline.
Additionally, on-chain data shows that in recent days, the German government transferred over 195 million US dollars worth of Bitcoin to various cryptocurrency exchanges, including Coinbase, Kraken, and Bitstamp, intensifying market volatility. Furthermore, according to Arkham monitoring, the US government wallet address (starting with 349c6) transferred 237 BTC to the bc1qvc address yesterday afternoon, equivalent to 13.67 million US dollars. Moves by the US and German governments’ holding addresses similarly heightened market concerns about future market conditions.
In addition to these factors, Bitcoin ETF spot holdings have also experienced net outflows in recent trading days. Nine Bitcoin ETFs collectively sold 609 BTC, valued at approximately 35 million US dollars. According to CryptoQuant data, during this decline, around 2.4 billion US dollars’ worth of Bitcoin, held for 3-6 months, has been transferred. Analyst Cauê Oliveira pointed out that this represents selling pressure from entities that bought at the beginning of the year, potentially liquidating positions related to Bitcoin ETFs and halving expectations.
Under the combined influence of multiple factors, the cryptocurrency market further declined.
Future Outlook: Trump’s Presidency May Change Market Decline
The main cause of this market downturn is Mt.Gox’s sales, although the market may have exaggerated their impact.
Vijay Ayyar, Head of Asia Pacific at Gemini, stated that due to the diverse recipients of Mt. Gox’s repayments, the overall impact on cryptocurrency markets may be “diverse.” On one hand, individual holders may immediately receive Bitcoin, while on the other, “significant” amounts of Bitcoin will be paid to the claims fund. These funds will subsequently distribute cryptocurrencies to their limited partners, a process that could take time, thereby increasing the impact’s duration on prices.
Alex Thorn, Director of Research at Galaxy, shares a similar view, believing that the final amount of Bitcoin received from Mt.Gox may be less than expected, indicating that the selling pressure could be less than the market anticipates. Moreover, most creditors he has spoken to intend to receive payment in physical form, specifically in cryptocurrencies rather than fiat currencies, suggesting they are unlikely to engage in mass selling.
Additionally, analysts from JPMorgan Chase suggest that Mt.Gox repayments may initially pressure the cryptocurrency market, but recovery could begin from August onwards, coinciding with FTX repayments. Creditors may reinvest funds into cryptocurrency assets.
Evgeny Gaevoy, Founder and CEO of Wintermute, posted on X, “Stay steady; the current market is just a seasonal phenomenon of summer. Markets will recover in August and September, before the US election.”
Another factor contributing to the market downturn is the German government’s sales. In response, Tron founder Justin Sun posted on X, expressing willingness to negotiate with the German government to privately purchase all their BTC, aiming to minimize market impact. Meanwhile, German parliamentarian Joana Cotar strongly criticized the government’s large-scale Bitcoin sales, suggesting the government should reconsider this strategy and compare it with the US’s approach of treating Bitcoin as a strategic reserve currency.
Regarding ETF fund outflows, yesterday’s outflows were more about market adjustments than continuous net outflows observed in previous weeks.
Ki Young Ju, Founder and CEO of CryptoQuant, stated that this cycle is different, with funds coming from different sources. Currently, Bitcoin ETFs account for a quarter of total spot trading volume, indicating that new entrants’ funds are more mature than ever before, with expectations of further mature capital entering the sector. Mature capital typically has strong hands, and many institutional capitals are still waiting to enter the field, now that channels have opened for them.
The most significant factors affecting future market trends are the results of the US election and expectations of a Federal Reserve interest rate cut.
Market analysis suggests that if Trump wins reelection, the end of the Russia-Ukraine war may bring about a major conclusion, leading to a global market upturn, and cryptocurrency markets may experience a wave of increases. Additionally, as a cryptocurrency-friendly individual, Trump’s assumption of office could further increase mainstream acceptance of the cryptocurrency industry, enhancing bullish expectations.
Furthermore, anticipation of a Federal Reserve interest rate cut has been a significant boon expected by the market this year. Federal Reserve Chairman Powell has expressed views on interest rate cuts for 2024 on various occasions. In an April speech, he mentioned a cautious approach to rate cuts, suggesting that starting a rate cut later this year “may be appropriate.” Additionally, he may provide a clearer hint at the timing of rate cuts during the June FOMC meeting.
Overall, the current market is showing signs of decline. Besides announcements of Federal Reserve rate cuts, we can only hope for bullish developments from the progress of the US election; currently, Trump’s chances of victory remain high, with expectations of market upturn in November.