Who is selling off value coins as the market takes a big dive

CoinDesk Report:
Jessy,
On July 5th, the crypto market once again experienced a significant downturn, with Bitcoin plummeting to around $54,000, while many altcoins have dropped even below their lows during the 2022 bear market.
Bitcoin continued its descent, and altcoins faced panic selling. According to CoinGecko data, the global cryptocurrency market cap has fallen below $2.1 trillion, marking a -7.81% change in the past 24 hours.
The direct cause of this decline appears to be extensive selling pressure on Bitcoin, exacerbated by uncertain macroeconomic interest rate adjustments. When will the market turn around?
High Selling Pressure and Weakening Macro Expectations
The cascading liquidation has already begun, with numerous whale positions liquidated since yesterday, resulting in approximately $700 million in liquidations across the crypto market in the past 24 hours. The rapid and continuous breaches of established support levels have been notable.
Indeed, since June, the major factors driving the downturn in sentiment have remained largely unchanged and can be summarized as follows:
1. Mt. Gox Begins Repaying BTC to Creditors
The Mt. Gox incident, a dormant bombshell over a decade, has finally exploded. On May 28th, after ten years of bankruptcy, Mt. Gox began transferring a total of 141,685 BTC from its cold wallet accounts, valued at approximately $98 billion at the time, triggering market panic. These BTC will be released to creditors between July and October.
As of July 5th, Mt. Gox has initiated repayments to creditors. Japanese creditor @VoiceOnFate announced today on X that they have received BTC and BCH compensation from Mt. Gox via designated exchange platforms, amounting to 13% of the BTC held in their accounts at the time.


On July 5th,
Mt. Gox’s
transfer records, including transfers to Bitbank exchange
Mt. Gox lost approximately 750,000 BTC belonging to users, and currently holds 141,686 BTC, accounting for 0.72% of the total circulating Bitcoin supply. Analysts suggest that if these BTC are sold, it could lead Bitcoin prices to drop to around $47,000.
(For more on the selling pressure resulting from Mt. Gox’s compensation, see “Galaxy Research Director: Mt. Gox’s Upcoming BTC Compensation – How Much Selling Pressure Will It Bring?”)
2. Governments Like Germany and the United States Sell Bitcoin
The German government holds 45,624 BTC, transferring over $425 million worth of Bitcoin in less than a week starting from June 25th.
Besides Germany, governments of the United States, United Kingdom, China, Ukraine, and others also hold significant amounts of Bitcoin.
According to on-chain data, the U.S. government sent 3,940 BTC to Coinbase Prime wallet on June 26th, 2024.
3. Miners Sell Off
Post-halving, miners’ income has sharply declined. With deteriorating income, many inefficient miners have been forced to exit the market, causing a significant drop in Bitcoin’s network hash rate. OKLink data shows that Bitcoin’s global network hash rate has decreased by 15% from its peak over the past two months, with a continuous decline in the past week.
Concurrently, miners have increased their selling pressure recently, becoming one of the largest selling pressures in the market. Currently, miners are more focused on short-term gains. IntoTheBlock data shows that since 2024, Bitcoin miners have sold over 50,000 BTC cumulatively, gradually reducing their Bitcoin reserves to historically low levels.
4. Slowing Institutional Inflows
Market liquidity is currently insufficient.
The core factor driving Bitcoin’s previous rise undoubtedly was Bitcoin spot ETFs. Matrixport previously reported that institutional investors including asset management firms, investment advisors, pension funds, and sovereign wealth funds were purchasing Bitcoin spot ETFs. The rapid influx of institutional funds surged Bitcoin demand, driving prices upward.
However, this consensus has been challenged recently. Since June, funds within Bitcoin spot ETFs have mostly experienced significant outflows.


5. Weakening Macro Expectations
During the monetary policy meeting on June 12th, the Federal Reserve maintained its federal funds rate target range at 5.25% to 5.5%, and according to the disclosed dot plot, Fed officials forecast that the median federal funds rate will drop to 5.1% by the end of 2024, indicating potentially only one rate cut within the year, down from the previously predicted two cuts.
Will there be further rate cuts this year? Currently, the likelihood seems slim.
Market Outlook Ahead
For the market to rise in the future, a fundamental factor will be the Federal Reserve’s rate cuts. As of now, market movements are predominantly influenced by information flow, and the most direct improvement would be the infusion of macro liquidity.
Another anticipated factor is the U.S. presidential election, where the escalating battle between Trump and Biden over crypto has intensified. The “crypto industry” has become a chip for politicians to woo voters. Trump has actively aligned himself with crypto figures, making public appearances at Bitcoin miner conferences, among other events. Biden has also participated in Bitcoin roundtable discussions and engaged with crypto-related individuals. This political game undoubtedly bodes well for the crypto industry, as evidenced by the sudden approval of the Ethereum spot ETF.
In this light, rate cuts and the U.S. election are actually long-term bullish signals for the crypto industry.
However, in the short term, the market has likely bottomed out. Bitcoin has already dropped to prices that trigger shutdowns for some miners, indicating a temporary bottom.
Currently, USDT is also trading at a premium. According to OKX data, the off-exchange price of USDT has risen to 7.38 yuan, while the offshore RMB exchange rate is 7.29 yuan per dollar. Generally, such premiums are caused by significant buying. The sentiment for bottom fishing is strong among investors.
Nevertheless, short-term market sentiment remains highly uncertain. Digesting selling pressures, such as Mt. Gox’s compensations that have just begun, will take time. The launch of Ethereum spot ETFs is still pending, and if its subsequent development falls short of market expectations, further market declines could occur.
In conclusion, investors may consider gradually accumulating Bitcoin, Ethereum, and other mainstream cryptocurrencies amidst the ongoing downturn.