Crypto Assets market experiences severe turbulence, Bitcoin falls below 54,000 US dollars

Data shows that at noon on July 5, the price of Bitcoin fell below the 54,000 USD mark, quoted at 53,984 USD, with a daily decline of up to 7.1%. Ethereum also suffered a heavy blow, falling below 2,850 USD, with a daily decline of 11%. Other small market cap crypto assets experienced even more severe declines, with multiple tokens falling over 20%, including ORDI, PEOPLE, ZK, AEVO, BAKE, and YGG. Meanwhile, the US dollar index fell below 105 for the first time since June 13.

The recent fall in Bitcoin prices is expected to result in approximately $620 million worth of long positions in the Crypto Assets derivatives market being forcibly liquidated, and the scale and number of liquidations may further increase.

The severe adjustment in this round of the crypto assets market is influenced by multiple bearish factors, including the continuous selling of Bitcoin by a certain country's government, a certain exchange starting debt repayment, and the outflow of funds from Bitcoin ETFs.

A well-known exchange has recently been frequently conducting wallet transfer operations to start repaying debts, raising market concerns about potential selling pressure. On-chain monitoring data shows that the exchange's related addresses have transferred approximately 47,228 Bitcoins (valued at about $2.7 billion) to two new addresses, one of which received 44,500 Bitcoins, while the other internal address received 2,700 Bitcoins.

A certain country's government has recently been continuously selling Bitcoin. At the beginning of June, the wallet marked as belonging to this country's government started transferring 50,000 Bitcoins that had been previously confiscated to trading platforms, and sold about 4,736 coins in batches throughout the month. In the past week, over 2,000 coins have been sold successively. Just this morning, after the market fell, the government was monitored transferring 13,475 Bitcoins and has already sold 13,000 coins. Currently, this country's government still holds more than 40,000 Bitcoins.

In addition, after a year of silence, the Bitcoin holding wallet of another country's government sent 4,000 Bitcoins to a certain trading platform on June 27, suspected to have started a selling mode. Yesterday, the wallet address was again monitored transferring out 237 Bitcoins.

At the same time, there has been a net outflow from the US spot Bitcoin ETF, intensifying market panic. Data shows that 9 Bitcoin ETFs have collectively reduced their holdings by 609 Bitcoins, valued at approximately 35 million USD. On July 3, the net outflow from the US spot Bitcoin ETF was 20.5 million USD.

The capital flow of Bitcoin ETFs is an important reference indicator for judging market trends. Data shows that Bitcoin ETFs have seen a net outflow for two consecutive days, with a total outflow amount reaching 34.2 million USD over the two days. The founder of a research institution estimated in a recent report that the average entry price for Bitcoin ETF buyers is between 60,000 and 61,000 USD. Therefore, when the price of Bitcoin falls below 60,000 USD, it may trigger stop-loss actions from ETF investors, further exacerbating the price decline.

Another factor worth noting is the lack of new capital inflows into the market. Since the middle of last year, the total market capitalization of stablecoins in the crypto market has shown a steady growth trend, while the overall market has also continued to rise, indicating clear bull market signals. However, since the beginning of May, there has been no new capital entering the crypto market, and the market capitalization of stablecoins has been hovering around 160 billion dollars for more than two months. The insufficient liquidity of funds in the market has resulted in a lack of sufficient buying power to push the market higher.

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

Historical data shows that the interaction of Bitcoin with the 200 DMA has been a reliable indicator for determining bull and bear market trends. Generally, a price breakout above the 200 DMA indicates a significant upward trend, while a drop below it may signal a prolonged bear market phase.

The current price trend requires investors to remain vigilant, 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.