Coin World Report:
Under the calm surface of the digital financial sea, a sudden storm has plunged the global virtual currency market into unprecedented turmoil. On the morning of July 8th, an invisible war broke out in the cryptocurrency field, causing the price of Bitcoin to plummet like a cliff, briefly breaking through the psychological defense line of $55,000 per coin. The maximum intraday decline exceeded 6%, and it finally closed at a price of $54,918 per coin. Compared to the high point in early June, the cumulative decline has exceeded 23%. This sudden plunge not only shocked Bitcoin investors, but also led to a “bloodbath” in the entire virtual currency market.
A complete slump, market confidence plummeting
The “flash crash” of Bitcoin quickly spread like a domino effect throughout the entire cryptocurrency market. None of the top 10 cryptocurrencies by total market value were spared, and they all experienced heavy losses. Ethereum followed closely behind, with a decline of over 6%, while the once popular Dogecoin plummeted by over 10%, leaving the market in a state of mourning. According to CoinGlass data, this storm caused over 81,000 investors to be liquidated within a short 24-hour period, with a total liquidation amount of $210 million, equivalent to over 1.5 billion yuan. Countless investors’ wealth evaporated in an instant.
Miner sell-off wave: Helpless actions in the face of profit difficulties
Behind the cryptocurrency market crash lies a large-scale sell-off wave led by miners. According to IntoTheBlock data, cryptocurrency mining companies have sold over $2 billion worth of Bitcoin since June this year, reaching a new high in over a year. Behind this number is the increasingly severe profit difficulties faced by miners.
After the Bitcoin halving event, miners’ mining rewards were directly halved, while operating costs remained high. The cost of electricity and equipment continued to rise, causing a large number of miners to face profitability issues. According to Kaiko data, miners’ total revenue plummeted from an average of $107 million per day before the halving to $30 million, and hash prices continued to decline, approaching historical lows. Against this backdrop, miners had to sell their Bitcoin holdings to sustain operations, further intensifying the downward pressure on the market.
Mt. Gox compensation storm: $9 billion sell-off pressure awaiting resolution
Just as the market was digesting the impact of the miners’ sell-off, an announcement from the Japanese cryptocurrency exchange Mt. Gox once again put the market on edge. This former giant, which was once one of the world’s largest Bitcoin exchanges, finally took a crucial step towards compensating users for their losses after declaring bankruptcy for many years. It is estimated that Mt. Gox will return approximately $9 billion worth of cryptocurrencies to about 20,000 creditors, including approximately 140,000 Bitcoin.
The announcement of this massive compensation plan immediately sparked widespread concerns in the market. Industry insiders pointed out that after creditors receive compensation, they will inevitably sell their Bitcoin holdings due to the need to recover funds or realize profits, thereby triggering a new round of sell-offs. This is especially true considering that Bitcoin has accumulated nearly a 74-fold increase since the Mt. Gox bankruptcy event in 2014, which may further amplify creditors’ willingness to sell. In addition, the historical replay of the Mt. Gox compensation event, which caused market turmoil after the Gemini exchange’s return of Bitcoin to users in June this year, has also filled investors with fear of the upcoming storm.
Multiple negative factors combined, where is the market heading?
In addition to the miners’ sell-off and the Mt. Gox compensation plan, the cryptocurrency market also faces pressure from regulatory authorities. The German government’s ongoing transfer and sale of Bitcoin to exchanges undoubtedly adds more uncertainty to the market. According to blockchain data, the German Federal Criminal Police Office has transferred thousands of Bitcoin to several exchanges recently, with a total value of hundreds of millions of dollars. These series of actions not only reflect the subtle changes in the government’s attitude towards cryptocurrencies but also intensify market panic.
In the face of the continued decline in the market, many industry insiders have expressed their views. Tron founder Justin Sun even called on the German government to negotiate the purchase of its Bitcoin holdings to reduce the impact on the market. However, the market’s response has been quite lukewarm. Josh Gilbert, a market analyst at eToro, said in an interview that the price of Bitcoin is expected to further deteriorate in the coming days. He pointed out that the current negative news far outweighs the positive news, and the sell-off activity is obviously unsettling for investors, which often triggers more selling behavior.
Conclusion
This storm in the cryptocurrency market undoubtedly sounded an alarm for all investors. In the context of increased market volatility, growing regulatory pressure, and the accumulation of multiple negative news, investors need to maintain a more cautious attitude and rationally evaluate every market fluctuation. At the same time, for practitioners in the cryptocurrency industry, how to find opportunities and promote the healthy development of the industry in adversity will also be an important issue in the near future.
This article is sourced from Finance World.
