Coin World News Report:
In recent days, the cryptocurrency market has experienced significant volatility, especially in altcoins. The price of Bitcoin has dropped to the range of $50,000, a decrease of about 30%. In contrast, many altcoins have experienced a decline of around 80%, with some falling to the levels seen during the bear market at the end of 2022, when the price of Bitcoin was around $16,000. StarEx believes that it may take some time to digest this pressure, but dawn will eventually come after the darkness.
The main sources of selling pressure in the market include:
Mt. Gox Compensation: The trustee of Mt. Gox announced in early July that the repayment of Bitcoin and Bitcoin Cash would begin, which raised concerns about future selling in the market.
German Government Liquidation: The German government has started liquidating the Bitcoin seized in 2013. In June, they sent nearly 4,000 Bitcoins to exchanges, and the selling has continued in July. Currently, they hold approximately 40,000 BTC.
US Government Sales: On June 26th, the US government transferred 3,940 Bitcoins to Coinbase Prime and conducted partial selling in July. They currently hold approximately 200,000 BTC.
Bitcoin Miners Selling: Due to the sharp decrease in production after the halving, miners have started selling Bitcoin to cope with financial expenses.
US Bitcoin ETP Outflows: Inflows into the US Bitcoin spot ETF have come to a halt and even started experiencing outflows.
The pressure on altcoins is even greater. Under the cover of the bull market in the past six months, funds have actually been flowing out of altcoins. With the wave of token unlocks, billions of dollars’ worth of tokens are unlocked every month, and VC institutions continue to sell. The cost of these tokens is very low, even less than 10% of the secondary market price.
This cycle of the cryptocurrency market has several notable characteristics:
VC Control: Most mainstream altcoins are invested in by VC institutions, with total market capitalization reaching tens of billions or even hundreds of billions of dollars, but their circulation is very limited. This favors early control of the market. Many project parties create concepts, seek endorsements from investment institutions, manipulate data, and then list at high prices to profit at the expense of investors. A large-scale washout is needed to make the market healthier.
Large-scale Derivatives Market: The derivatives market has reached a scale of hundreds of billions of dollars, making it easier for institutions to manipulate the market, causing both rise and fall. Bitcoin may be relatively stable, but dramatic drops in altcoins will become more common.
“US Stock Marketization” Trend: This bull market is driven by ETFs, mainly Bitcoin, with concepts such as meme and brc20 being speculative in between. Most investors have failed to profit or even suffered losses, increasing the difficulty of operations.
Four-year Cycle May No Longer Be Effective: The traditional four-year cycle in the cryptocurrency market may no longer be valid, and past experiences may no longer be reliable.
StarEx believes that the Federal Reserve will eventually expand its balance sheet again. The reasons include the conclusion of the US presidential election, clarity in the Federal Reserve’s monetary policy, and the performance of the US stock market. Each of these factors will have a significant impact on the global financial market. Currently, the core factors that can drive the cryptocurrency market to enter another bull market are either a large-scale ecological prosperity or the Federal Reserve continuing to extensively print money. Given that the current US debt stands at $34 trillion, with an interest rate exceeding 5%, the US stock market and the Japanese stock market at high levels, and countries like China and Europe burdened with debt, it is expected that the scale of the next round of monetary easing will be massive. The prospect of cryptocurrencies moving towards a prosperous future is foreseeable.
Of course, StarEx believes that the bear market does not hit rock bottom with a single drop. After this period of sharp decline, there may be a short-term stabilization and rebound. In terms of strategy, it is recommended to engage in periodic investment, avoid heavy positions, and stay away from borrowing, waiting for the arrival of a major market trend.
