Source: Brokerage China Author: Zhou Le
The crypto currency market has suffered a sudden "Bloodbath".
On the morning of July 8th, the virtual currency market suddenly plummeted, with the price of Bitcoin dropping below $55,000 per coin, a maximum intraday decline of more than 6%, and the current price is $54,918 per coin. The top 10 cryptocurrencies by market cap collectively fell, with Ethereum falling more than 6% and Dogecoin falling more than 10% at one point. Data shows that in the last 24 hours, more than 810,000 people have been liquidated in the cryptocurrency market.
In terms of news, the cryptocurrency market is currently facing a fierce sell-off. According to IntoTheBlock, since June this year, virtual currency mining companies have sold more than $2 billion worth of Bitcoin, the highest in more than a year.
Meanwhile, Japanese cryptocurrency exchange Mt. Gox announced that it will begin repaying users' huge losses of cryptocurrency in July. It is estimated that the total value of these cryptocurrencies is about $9 billion (approximately RMB65.4 billion), including about 140,000 Bitcoin. Industry insiders believe that after the creditors receive their compensation, there will inevitably be a wave of selling, which may trigger panic among other investors, followed by selling of Bitcoin. It is expected that the price of Bitcoin will further deteriorate in the next few days.
Heavy losses across the board
On the morning of July 8th, the virtual currency market suddenly plummeted, with the price of Bitcoin dropping below $55,000 per coin, a maximum intraday decline of more than 6%, and the current price is $54,918 per coin. Compared with the high point at the beginning of June, the cumulative decline has exceeded 23%.
While Bitcoin crashed, the virtual currency market suffered a 'bloodbath', and the top 10 by market cap of cryptocurrencies plummeted, with Ethereum falling more than 6% and Dogecoin falling more than 10% at one point.
According to CoinGlass data, over 810,000 people have been liquidated in the cryptocurrency market in the last 24 hours, with a total of about $210 million (approximately RMB1.5 billion) in liquidations.
In terms of news, virtual currency mining companies are currently selling on a large scale. According to IntoTheBlock, since June this year, 'miners' have sold more than $2 billion worth of Bitcoin, the highest in more than a year. Currently, the number of Bitcoins held by 'miners' has fallen to the lowest level in 14 years.
The continuous selling of Bitcoin by 'miners' may be affected by expectations of a decline in mining revenue. 'Miners' income mainly comes from two sources: mining rewards and transaction fees. The halving event in April this year directly affected the mining rewards of 'miners', but the operating costs of 'miners', such as electricity and equipment costs, have not decreased but increased, causing many 'miners' to face difficulties in profitability.
The income of Bitcoin miners has reached a historical low over the past two months. According to Kaiko data, the total revenue of 'miners' has dropped from an average of $107 million per day before the 'halving' to $30 million. In addition, the 'hash price', the indicator that measures the profitability of 'miners' per computing power unit, continues to decline. The average mining income calculated by hash is currently $0.049 per EH/s, approaching the historical low.
According to f2pool data, as Bitcoin's trading price falls below $58,000, inefficient 'mining machines' are facing challenges under current market conditions.
Analysts believe that the latest move by Binance, the world's largest cryptocurrency exchange, may also affect sentiment in the virtual currency market.
Binance will suspend trading services for six pairs of cryptocurrencies: BTC/AEUR, ETH/AEUR, AI/TUSD, CHR/BNB, GAS/FDUSD, LQTY/FDUSD, and the revision will take effect on July 5th. The company did not disclose the specific reasons, but reminded that it will regularly review all listed spot trading pairs and delete some trading pairs in the case of poor liquidity or other factors.
Intense selling wave
Recently, Japanese cryptocurrency exchange Mt. Gox announced that it will begin repaying users' huge losses of cryptocurrency in July. Due to its similar pronunciation, Mt. Gox exchange is known as the 'Mentougou exchange' by domestic currency circle insiders. The exchange was once one of the world's largest cryptocurrency exchanges, but suffered huge losses due to a hacker attack in 2014 and eventually filed for bankruptcy.
The trustee designated by the court responsible for supervising the bankruptcy proceedings of Mt. Gox exchange announced that from July, the funds will be returned to about 0.2 million creditors in the form of Bitcoin and Bitcoin Cash. It is estimated that the total value of these cryptocurrencies is about $9 billion (approximately RMB65.4 billion), including about 140,000 Bitcoin.
Blockchain analytics firm Arkham Intelligence recently said that Mt. Gox exchange has transferred 0.047 million bitcoins to a new wallet address, worth about $2.6 billion (approximately RMB 19 billion) at current prices.
Mt. Gox was once the world's largest Bitcoin exchange, accounting for 70% of the Bitcoin trading market at its peak. In February 2014, Mt. Gox announced that it would suspend all Bitcoin withdrawals. According to an internal document at the time, hackers attacked Mt. Gox and stole 0.85 million bitcoins. As a result of this event, the price of Bitcoin plummeted by more than 60%.
Industry insiders believe that Bitcoin has risen nearly 74 times since 2014. There will inevitably be a wave of selling pressure after creditors receive compensation, particularly among those who hold large amounts of Bitcoin and may partially profit from them. This may also trigger panic among other investors, leading to a subsequent sell-off of Bitcoin.
Looking back, in June of this year, the bankrupt cryptocurrency exchange Gemini returned more than $2 billion worth of Bitcoin to its users, causing a frenzy of selling and a sharp drop in Bitcoin prices.
In addition, JPMorgan analysts predict that Mt. Gox users, like Gemini users, will also tend to sell some of their received Bitcoin to profit from them, and the price pressure is only temporary. They predict that Bitcoin prices will begin to rebound in August of this year.
In addition, the German government is also one of the "shorts" in the cryptocurrency market, continuing to transfer and sell Bitcoin to major exchanges.
According to blockchain data, on July 4th, the German Federal Criminal Police Office transferred 400, 500, and 400 bitcoins to the Kraken, Bitstamp, and Coinbase exchanges, respectively, with a total value of about $75 million. Its holdings of bitcoins have dropped from 0.05 million coins on June 29th to 42,274 coins, selling a total of 7,726 bitcoins, worth about $0.45 billion (approximately RMB 3.3 billion).
Facing the continuous decline of cryptocurrencies, Tron founder Sun Yuchen called out to the German government, saying that he was willing to negotiate and buy all of their Bitcoin holdings off the market to minimize the impact on the market.
eToro market analyst Josh Gilbert said in an interview with Cointelegraph that he expects the price of Bitcoin to further deteriorate in the coming days. Currently, there are far more bearish news than bullish news, and the selling activity is clearly making investors uneasy, which often leads to more selling.
Editor/Lambor