Author: 1912212.eth, Foresight News
After hovering above the 60,000 integer mark for several days, the market finally chose to "accelerate" downwards today. After the midday, it successively fell below the integer marks of 58,000 and 57,000, with the lowest point reaching $56,952, hitting a new low for nearly two months. Ethereum also dropped from $3,300 to $3,126, leading to a general decline in the cryptocurrency market. In the past 24 hours, there were fewer than ten non-stablecoin assets with positive gains in the Binance USDT market, and ARB even hit a new all-time low of $0.71.
According to Coinglass data, there were a total of $207 million in liquidation in the past 12 hours, with long positions liquidated at $187 million.
In this "bull market" supported by a series of positive factors such as "halving + ETF + election," what caused this deep correction? Has the bull market really ended?
German Government Sells About 10,000 BTC in Half a Month
At the beginning of this year, the German police confiscated 50,000 bitcoins, worth $2.17 billion, in a case related to the operation of a pirated website that violated copyright laws in 2013. The proceeds of the company were subsequently converted into bitcoins. A statement claimed that one of the two suspects voluntarily transferred the bitcoins to the Federal Criminal Police Office (BKA). Although no formal charges have been brought against these individuals, an investigation into subsequent money laundering activities is still ongoing. At the time, the police statement also added that a final decision had not been made regarding the use of bitcoins.
These bitcoins were finally sold starting in June, with a total of about 9,600 bitcoins sold, leaving a remaining position of 40,359 BTC.
- On June 19, 6,500 bitcoins were sold.
- On June 25, 400 bitcoins were transferred to an exchange at 5:20 PM, and 500 were transferred to other addresses.
- On June 26, 750 bitcoins were transferred out at 3:50 PM.
- On July 1, 400 bitcoins were transferred to an exchange at 4:26 PM, followed by another transfer of 282.74 bitcoins to multiple exchanges.
- On July 2, 361.877 bitcoins were transferred to Flow Traders at 7:20 PM.
In today's transfers, the German government transferred 1,300 BTC to an exchange at 4:25 PM and 1,700 BTC to an anonymous wallet address at 4:35 PM.
BTC finally fell below $57,000 around 5:15 PM today, reaching a low of $56,952.
Mentougou's Large Compensation Has Started Small-Scale Transfer Testing
The compensation issue in Mentougou has been a concern for the market, with as many as 142,000 BTC and 143,000 BCH in selling pressure, which caused market panic on June 24, briefly pushing the BTC price to near $60,000. However, as the distribution transfers had not truly begun at that time, the $60,000 mark was held. According to official website documents released earlier, the Mt.Gox trustee stated that the distribution of BTC and BCH repayment would begin in early July.
As of July 4, according to the latest data from the Arkham platform, Mentougou conducted test transfers at 12 PM today. The market had already entered a sharp decline mode around 9 AM today. Although the selling pressure was not from Mentougou, it still cast a shadow over market confidence, as the large selling pressure loomed ahead.
BTC Spot ETF Sees Net Outflow for the First Time in 5 Days After Net Inflow
The Bitcoin spot ETF, as an important indicator of buying and selling strength in the market, has seen concerning data. According to SoSoValue, the total net outflow on July 3 reached $20.4495 million, marking the first net outflow after 5 days of net inflow.
When we extend the timeline, the chart clearly shows that when the net inflow of the Bitcoin spot ETF is high, the Bitcoin price tends to rise. Conversely, when the net outflow is significant, the Bitcoin price clearly falls. In May, the continuous net inflow of funds provided support for the rise in Bitcoin prices, but in June, the total net outflow accelerated significantly, leading to a substantial outflow of funds.
What's Next?
In its latest market analysis, QCP Capital stated that BTC broke through the $60,000 support level under heavy selling pressure, with signs of surrender from BTC miners, which historically indicates a bottoming out of prices. The last comparable drop in hash rate occurred in 2022, when the Bitcoin trading price was $17,000. In addition, despite the severe sell-off in the cryptocurrency market, the options market remains optimistic, especially for bullish options on ETH expiring in September and December.
QCP Capital believes that considering the recent selling pressure from Bitcoin and the driving factors of Mt.Gox, miners, and government regulation, as well as the upcoming submission of the Ethereum spot S-1 document, ETH may experience a stronger rebound.
However, Andrew Kang, co-founder and partner of Mechanism Capital, appears more pessimistic.
He stated that most market participants have not realized the severity of the potential decline in the 4-month range of Bitcoin. The closest similar situation we can find is the range in May 2021, when Bitcoin and altcoins also experienced a parabolic rise. The leverage of over $50 billion in cryptocurrencies is also close to historical highs (excluding CME), but in this case, our range time is longer (18 weeks vs. 13 weeks), and extreme washouts have not yet occurred. In the mid-term of the bull market from 2020 to 2021, we experienced several such instances.
He also mentioned that the initially estimated low point of $50,000 may be too conservative, and we may see a more extreme pullback to the $40,000 range. Such a pullback could cause significant damage to the market and may require several months of oscillation/downward trends (recovery period) before a reversal to an upward trend may occur.
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