Crypto Assets market suffers a heavy blow, Bitcoin falls below $54,000

On July 5 at 12:00, data showed that the price of Bitcoin fell below $54,000, quoted at $53,984, with an intra-day drop of up to 7.1%. Ethereum was also not spared, falling below $2,850, with an intra-day drop of 11%. Other smaller crypto assets generally faced larger declines, with multiple tokens dropping over 20%, and ARB even setting a new historical low. Meanwhile, the US Dollar Index (DXY) fell below 105 for the first time since June 13.

This wave of fall is expected to lead to the liquidation of approximately $620 million in long positions in the contract market, and the scale of liquidations may further expand.

The recent sharp fall in the crypto assets market was influenced by multiple negative factors, including the German government's continued selling of Bitcoin, the commencement of debt repayments by Mt.Gox, and net outflows of funds from Bitcoin ETFs.

Recently, wallets related to Mt.Gox have been frequently transferring funds, starting debt repayments, raising market concerns about large-scale selling pressure. Monitoring data shows that Mt.Gox has transferred approximately 47,228 Bitcoins (worth about $2.7 billion) from cold storage to new wallet addresses.

At the same time, the selling actions of the German and US governments have also put pressure on the market. The German government has been continuously selling Bitcoin that was previously seized from illegal websites, having sold 13,000 coins just this morning. The US government has also been monitored transferring Bitcoin to trading platforms, suspected of initiating a sell-off.

On the other hand, Bitcoin spot ETFs have experienced net outflows for two consecutive days, with total outflows reaching $34.2 million, which is seen as an important indicator of a shift in market sentiment. Analysts estimate that the average entry price for ETF investors is between $60,000 and $61,000, and a fall below this level could trigger further selling.

In addition, the lack of new funds entering the market is also an important factor restricting the market trend. Since the beginning of May, the total market capitalization of stablecoins in the crypto market has hovered around $160 billion, indicating insufficient liquidity in the market and a lack of sufficient buying power to drive the market upward.

From a technical perspective, the Bitcoin price has fallen below the 200-day moving average (DMA) for the first time since August 2023. Historically, a breakthrough or breakdown of this indicator usually signals a significant market trend reversal. The current price movement may indicate the end of the recent bull market cycle, and investors should closely monitor subsequent developments to assess the future market trend.