Who is dumping the market? Bitcoin falls below $54,000, and the market is in despair

Source: CoinWorld

Author: Web3 Scent Observation

According to CoinWorld market data, as of July 5 at 12:00, Bitcoin has fallen below $54,000, currently reported at $53,984, with a daily decline of 7.1%. Ethereum has dropped below $2,850, with a daily decline of 11%. Other altcoins have also seen significant declines, with ORDI, PEOPLE, ZK, AEVO, BAKE, and YGG all dropping over 20%, and ARB hitting a historical low. Meanwhile, the US Dollar Index (DXY) has fallen below 105 for the first time since June 13.

(CoinWorld cryptocurrency market)

This time, Bitcoin's price dropping below $54,000 is expected to lead to $620 million in long positions being liquidated across major cryptocurrency exchanges (CEX), resulting in an increase in the number and amount of liquidations.

The recent catastrophic drop in the crypto market has been influenced by several negative news, including the German government's continued selling of BTC, Mt. Gox debt repayments, and net outflow indicators for Bitcoin ETFs, which may have contributed to the collapse in Bitcoin prices.

Mt. Gox Begins Debt Repayment, Raising Concerns of Large-Scale Sell-Off

Recently, the Mt. Gox wallet has been frequently transferring funds, starting to repay compensation, raising market concerns about potential selling pressure.

According to Arkham monitoring, on July 5, about an hour ago, an address starting with 1L7Xbx transferred 2,702 Bitcoins to the Mt. Gox cold wallet, which were subsequently transferred to Bitbank (one of the trading platforms supporting Mt. Gox repayments). Additionally, Mt. Gox has moved 47,228 Bitcoins (approximately $2.71 billion) from cold storage to a new wallet.

Furthermore, on-chain monitoring data shows that the Mt. Gox-related address 1L7Xbx … 6onk has transferred 47,228 Bitcoins (approximately $2.7 billion) to two addresses:

• Address 16ArP3 … VqdF: Received 44,500 Bitcoins, valued at approximately $2.55 billion

• Internal address 1JbezD … APs6: Received 2,700 Bitcoins, valued at approximately $154.8 million

German and US Governments Sequentially "Crash the Market"

First, there was the German government's selling behavior. In early June, a wallet marked as "German Government" began transferring 50,000 Bitcoins seized from the piracy site operator Movie2k to trading platforms, selling approximately 4,736 Bitcoins in batches that month. In the past week, the German government has sold over 2,000 Bitcoins. Just this morning, after the market decline, the German government was monitored transferring 13,475 Bitcoins and has already sold 13,000. As of now, the German government still holds over 40,000 Bitcoins.

Additionally, a US government BTC holding wallet that had not moved for a year sent 4,000 BTC to Coinbase on June 27, suspected of entering a selling mode. Yesterday, the "US Government" wallet address (starting with 349c6) was monitored transferring 237 BTC to an address starting with bc1qvc.

Combined with the net outflow of the US spot Bitcoin ETF, market panic has accelerated. Data shows that nine Bitcoin ETFs have collectively reduced their holdings by 609 Bitcoins, valued at approximately $35 million. On July 3, the net outflow from the US spot Bitcoin ETF was $20.5 million.

Bitcoin Spot ETF Experiences Two Consecutive Days of Net Outflow

On the other hand, Bitcoin spot ETFs are an important reference for judging market direction. Data shows that Bitcoin ETFs have experienced two consecutive days of net outflow, with a total outflow amount of $34.2 million over the two days.

From the net flow of Bitcoin ETFs, Markus Thielen, founder of 10x Research, stated in his latest report that the average entry price for Bitcoin ETF buyers is estimated to be between $60,000 and $61,000. Therefore, when Bitcoin fell below $60,000 yesterday, it could trigger a wave of ETF liquidations, further driving down Bitcoin prices.

Moreover, the lack of new funds entering the market is also a significant reason why the market is struggling to meet expectations. Since mid-last year, the total market value of stablecoins in the crypto market has steadily increased, corresponding to a continuous rise in the market at that time, with clear signals of a bear-to-bull transition. However, from early May to now, there has been no new money entering the crypto market, and the market value of stablecoins has been hovering around $160 billion for over two months. Insufficient liquidity in the market has led to a lack of buying power to drive the market up.

Bitcoin Falls Below 200-Day Moving Average, Bull Market Cycle Questioned

Bitcoin's price has fallen below the 200-day moving average (DMA), which is currently at $58,373. This is the first time Bitcoin has fallen below this key technical indicator since August 2023. Since the beginning of 2024, Bitcoin's price has been on the rise, peaking over $70,000 in March. However, the recent price drop below the 200 DMA indicates that the market may be entering a correction phase.

According to Glassnode data, historically, the interaction between Bitcoin and the 200 DMA has been a reliable indicator for determining bull or bear market trends. Generally, a price breakout above the 200 DMA indicates a significant upward trend, while a drop below suggests a prolonged bear market phase.

BTC 200-Day Moving Average, from Glassnode

The current price trend needs to be approached with caution, as it may signal the end of the recent bull market cycle. This dynamic indicates that the Bitcoin market is under significant pressure during the post-halving adjustment process. Investors need to closely monitor future price movements to assess the next trend in the market.