The crypto market has fallen sharply, and Bitcoin has dropped below $54,000.

On July 5th at 12:00, the price of Bitcoin fell below $54,000, quoted at $53,984, with an intraday decline of 7.1%. Ethereum also fell below $2,850, with an intraday decline of 11%. Other cryptocurrencies generally declined, with multiple tokens dropping more than 20%, and some coins even hitting historical lows. Meanwhile, the US Dollar Index (DXY) fell below 105, marking the first time since June 13.

The recent fall in Bitcoin prices is expected to lead to approximately $620 million in long positions being liquidated in the contract markets of major crypto market exchanges, with the number of liquidations and amounts likely to increase further.

The recent fall in the crypto market is influenced by several factors, including the German government's continued sale of Bitcoin, Mt.Gox starting to repay debts, and net outflows of Bitcoin ETFs.

Mt. Gox starts repaying debts, raising concerns in the crypto market

Recently, the Mt. Gox wallet has been transferring frequently and has started making payments, raising concerns in the market about potential selling pressure.

On-chain monitoring data shows that on July 5, an address transferred 2,702 Bitcoins to the Mt. Gox cold wallet, and subsequently these Bitcoins were transferred to one of the trading platforms that support Mt. Gox repayments. In addition, Mt. Gox also transferred 47,228 Bitcoins (approximately $2.71 billion) from cold storage to a new wallet.

Government Holdings of Bitcoin Trends

The German government has been continuously selling Bitcoin recently. At the beginning of June, a wallet marked as "German government" began transferring 50,000 Bitcoins that had been previously seized to trading platforms, selling approximately 4,736 coins in batches throughout the month. In the past week, over 2,000 more have been sold. This morning, after a fall in the market, the German government was observed transferring 13,475 Bitcoins and has already sold 13,000 coins. Currently, the German government still holds over 40,000 Bitcoins.

Additionally, the U.S. government's Bitcoin holding wallet sent 4,000 Bitcoins to a trading platform on June 27, suspected to be starting to sell. Yesterday, this wallet address was again monitored to have transferred out 237 Bitcoins.

Bitcoin ETF Net Outflow Situation

Bitcoin spot ETFs have seen a net outflow for two consecutive days, with a total outflow amount reaching 34.2 million USD. Data shows that 9 Bitcoin ETFs have collectively reduced their holdings by 609 Bitcoins, valued at approximately 35 million USD. On July 3rd, the net outflow from the US spot Bitcoin ETF was 20.5 million USD.

An analyst estimates that the average entry price for Bitcoin ETF buyers is between $60,000 and $61,000. Therefore, when Bitcoin falls below $60,000, it may trigger a wave of ETF liquidations, further driving down the price of Bitcoin.

In addition, the lack of new funds entering the market is also an important reason why the market is struggling to meet expectations. Since the middle of last year, the total market value of stablecoins in the crypto market has been steadily increasing, corresponding to the continuous rise of the market. However, from the beginning of May until now, there has been no new funds flowing into the crypto market, and the market value of stablecoins has been hovering around 160 billion dollars for more than two months. The insufficient liquidity of funds in the market has led to a lack of adequate buying power to drive the market up.

Technical Indicator Analysis

The price of Bitcoin has fallen below the 200-day moving average (DMA), which is currently at $58,373. This is the first time Bitcoin has fallen below this key technical indicator since August 2023. Since the beginning of 2024, the price of Bitcoin has been on the rise, peaking above $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 always been a reliable indicator for assessing market trends. Generally, a price breakout above the 200 DMA indicates a significant upward trend, while a drop below suggests a prolonged downward phase.

The current price trend needs to be treated with caution, as it may signify the end of the recent upward cycle. This dynamic indicates that the Bitcoin market is under significant pressure during the adjustment process after the halving. Investors need to closely monitor future price movements to assess the next trend in the market.