The crypto market experiences a big dump, Bitcoin falls below $54,000

On July 5th, the crypto market experienced a severe fall. As of 12 PM, the price of Bitcoin had fallen below $54,000, reporting $53,984, with an intraday drop of up to 7.1%. Ethereum also suffered a heavy blow, falling below $2,850, with an intraday drop of 11%. Other small market cap tokens were even more severely affected, with many coins dropping over 20%, and ARB even falling to an all-time low.

The recent big dump in the market is expected to result in approximately $620 million in long positions being liquidated, exacerbating investors' losses.

Multiple factors have contributed to this big dump. First, the German government’s continuous selling of Bitcoin has raised market concerns. Recently, the German government has frequently transferred previously seized Bitcoins to trading platforms and conducted large-scale sales. Just this morning, the German government transferred 13,475 Bitcoins and has sold 13,000.

Secondly, Mt. Gox has begun repaying debts, raising concerns in the market about a large-scale dump. Data shows that Mt. Gox has transferred 47,228 Bitcoins (approximately $2.71 billion) from cold storage to a new wallet, which may indicate an impending large-scale repayment.

In addition, the U.S. government has also begun to sell Bitcoin. On June 27, a wallet labeled "U.S. Government" sent 4,000 Bitcoins to a trading platform, suspected to have started the selling mode.

The continuous net outflow of Bitcoin spot ETFs has also intensified market panic. Data shows that 9 Bitcoin ETFs have collectively reduced their holdings by 609 Bitcoins, worth approximately $35 million. On July 3, the net outflow of the US spot Bitcoin ETF was $20.5 million.

Market analysts point out that the average entry price for Bitcoin ETF buyers is estimated to be between $60,000 and $61,000. Therefore, when Bitcoin falls below $60,000, it could trigger a wave of ETF liquidations, further driving down the price of Bitcoin.

Another phenomenon worth noting is that since early May, there has been no new capital entering the crypto market. The total market value of stablecoins has been hovering around $160 billion for more than two months, indicating a lack of liquidity in the market and insufficient buying power to drive the market up.

From a technical perspective, the price of Bitcoin has fallen below the 200-day moving average (DMA) for the first time since August 2023. Historical data indicates that the 200 DMA is an important indicator for assessing bull and bear market trends. A price drop below this key technical indicator may signal the market entering a correction phase and could even mark the end of the recent bull market cycle.

Overall, the current crypto market is facing multiple pressures, and investors need to closely monitor future price trends to assess the next steps in the market. In this uncertain market environment, it is especially important to remain cautious and rational.