Coin World Report:
Under the calm surface of the digital financial sea, a sudden storm has plunged the global cryptocurrency market into unprecedented turmoil. On the morning of July 8th, an unsmoked war quietly broke out in the field of cryptocurrency, and the price of Bitcoin plummeted like a cliff, falling below the psychological defense line of $55,000 per coin, with a maximum intraday decline of over 6%. It closed at a price of $54,918 per coin, with a cumulative decline of over 23% compared to its high point in early June this year. This sudden plunge has not only shocked Bitcoin investors, but also led to a “bloodbath” in the entire cryptocurrency market.
A total collapse, market confidence plummeting
Bitcoin’s “flash crash” has had a domino effect, quickly spreading to the entire cryptocurrency market. None of the top 10 cryptocurrencies by market capitalization were spared, all experiencing heavy losses. Ethereum followed closely behind, with a decline of over 6%, while the once popular Dogecoin plummeted by more than 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 hours, with a total liquidation amount of up to $210 million, equivalent to over 1.5 billion yuan. Countless investors’ wealth evaporated in an instant.
Miner sell-off wave: Helpless actions in a profit dilemma
Behind the cryptocurrency market crash is 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 figure is the increasingly severe profit dilemma faced by miners.
After the Bitcoin halving event, miners’ mining rewards were cut in half, while operating costs remained high, with electricity and equipment expenses continuing to rise. This has led to a large number of miners facing profitability challenges. According to Kaiko data, miners’ total revenue has plummeted from an average of $107 million per day before the halving to $30 million, and hash prices have continued to decline, approaching historic lows. Against this backdrop, miners have had to sell their Bitcoin holdings to maintain operations, further exacerbating the downward pressure on the market.
Mt. Gox compensation storm: $9 billion sell-off pressure awaits resolution
Just as the market was still 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, has finally taken a crucial step towards compensating users for their losses after announcing bankruptcy years ago. It is estimated that Mt. Gox will return approximately $9 billion worth of cryptocurrencies to around 20,000 creditors, including about 140,000 Bitcoin.
The announcement of this massive compensation plan immediately sparked widespread concerns in the market. Industry insiders pointed out that once creditors receive their compensation, driven by the need to free up capital or take profits, they will inevitably sell their Bitcoin holdings, triggering a new wave of sell-offs. This is especially true considering that Bitcoin has accumulated nearly a 74-fold increase since the Mt. Gox bankruptcy in 2014, making creditors even more eager to sell. In addition, the history of the Mt. Gox compensation event— the market turmoil caused by the return of Bitcoin to users by the Gemini exchange, which went bankrupt in June this year— has 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 is also facing pressure from regulatory authorities. The German government’s continuous transfer and sale of Bitcoin on exchanges has undoubtedly added more uncertainty to the market. According to blockchain data, the German Federal Criminal Police Office has recently transferred thousands of Bitcoin to multiple exchanges, totaling hundreds of millions of dollars. These actions not only reflect the subtle change in the government’s attitude towards cryptocurrencies but also intensify market panic.
Faced with the continued market decline, many industry insiders have expressed their opinions. Tron founder Justin Sun even called on the German government to negotiate the purchase of its Bitcoin holdings in order to reduce the impact on the market. However, the market’s response has been quite tepid. Josh Gilbert, a market analyst at eToro, said in an interview that he expects Bitcoin’s price to further deteriorate in the coming days. He pointed out that the current negative news far outweighs the positive news, and the sell-off activities have clearly made investors uneasy, which often leads to more selling.
Conclusion
This storm in the cryptocurrency market undoubtedly sounded the alarm for all investors. In the context of increasing market volatility, growing regulatory pressure, and multiple negative news, investors need to maintain a more cautious attitude and rationally view 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 Financial World.
