CoinDesk Report:
After hovering above the 60,000 mark for several days, Bitcoin finally opted for a downward “acceleration” in the market today. Following midday trading, it successively fell below the 58,000 and 57,000 milestones, reaching a low of $56,952 at one point, marking a new low in nearly two months. Ethereum followed suit, dropping from $3,300 to $3,126, catalyzing a general downturn in the crypto market. Within the Binance USDT market, fewer than ten non-stablecoin assets saw positive gains in the past 24 hours, with ARB even hitting a historic low of $0.71.
According to Coinglass data, liquidations totaled $207 million in the past 12 hours, with long positions accounting for $187 million of that.
What triggered this deep pullback in the “bull market” bolstered by factors like halving, ETFs, and elections? Has the bull market truly ended?
Half a month ago, the German government began selling approximately 10,000 BTC. Earlier this year, German authorities seized 50,000 Bitcoins valued at $2.17 billion in a case involving a pirated website operating in violation of copyright laws since 2013. Proceeds from the enterprise were subsequently converted into Bitcoin. It was stated that one of the two suspects voluntarily transferred Bitcoins to the Federal Criminal Police Office (BKA), although formal charges against these individuals are pending, investigations into subsequent money laundering activities continue. At the time, police statements added that final decisions regarding Bitcoin usage had not yet been made.
Starting in June of this year, these Bitcoins began to be sold off, with a total of approximately 9,600 Bitcoins sold. The current holdings amount to 40,359 BTC.
On June 19, 6,500 Bitcoins were sold; on June 25, 400 were transferred to exchanges and 500 to other addresses in the afternoon; on June 26, 750 were transferred out at 3:50 PM; on July 1, 400 were transferred to exchanges at 4:26 PM, followed by another 282.74 to multiple exchanges; and on July 2, 361.877 were transferred to Flow Traders at 7:20 PM.
V: tanzhangii
In today’s transfers, the German government transferred 1,300 BTC to exchanges at 4:25 PM and 1,700 BTC to anonymous wallet addresses at 4:35 PM.
BTC ultimately fell below $57,000 around 5:15 PM today, dropping to a low of $56,952.
Huge compensation payments from Meantougou have started small transfer tests
The compensation issue of Meantougou has touched the market’s heart. As many as 142,000 BTC and 143,000 BCH selling pressures caused market panic on June 24 and caused BTC prices to fall near $60,000. However, as the distribution and transfer did not really begin at that time, the $60,000 mark was held. Earlier disclosures on official website files show that Mt.Gox’s trustee stated that BTC and BCH repayment work will begin in early July.
By July 4, according to the latest display of the Arkham platform, Meantougou has tested the transfer at 12 o’clock today. The market has already started a sharp drop mode at 9 o’clock today, although the selling pressure is not Meantougou, it also casts a shadow over the confidence in the market in the future, after all, the large-scale selling pressure is ahead, and no one is willing to stand under the dangerous wall.
BTC spot ETF net outflow for the first time after net inflow in the past 5 days
Bitcoin spot ETF, as an important indicator of market buy and sell strength, is not optimistic based on observed data. According to SoSoValue, the total net outflow on July 3 was $20.4495 million, marking the first net outflow after net inflows in the past 5 days.
When we extend the timeline, the above chart clearly shows that when the net inflow of Bitcoin spot ETF is high, Bitcoin prices tend to rise. Conversely, when the net outflow on a particular day increases, Bitcoin prices tend to decline. In May, sustained net inflows of funds helped Bitcoin prices rise, but in June, total net outflows accelerated significantly, with substantial funds leaving.
What about the future?
QCP Capital stated in its latest market analysis that BTC has broken through the $60,000 support under heavy selling pressure, with signs of miners surrendering, historically signaling a price bottom. The last comparable hash rate drop occurred in 2022 when Bitcoin traded at $17,000. In addition, despite severe cryptocurrency sell-offs, options markets remain optimistic, particularly for bullish ETH options expiring in September and December.
QCP Capital believes that considering recent Bitcoin selling pressure and factors such as Mt.Gox, miners, and government regulations, as well as the upcoming Ethereum spot S-1 filings, ETH may see a stronger rebound.
Meanwhile, Andrew Kang, Co-Founder and Partner at Mechanism Capital, appears more pessimistic.
He suggests that most market participants may not realize the severity of a potential 4-month downturn in Bitcoin’s range. The closest similar scenario 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 close to historical highs (excluding CME), but in this case, our range is longer (18 weeks vs. 13 weeks), and extreme washing has not yet occurred, as we experienced during the mid-term bull market from 2020 to 2021.
He also suggests that the initial estimate of a $50,000 low point may be too conservative, and we may see more extreme pullbacks into the $40,000 range. Such a rollback could cause considerable damage to the market and may require several months of oscillation/downtrend (recovery period) before a reversal to an upward trend could occur.
