Author: Climber, Jinse Finance
On June 24, the crypto market experienced another sharp drop, with BTC falling below $63,000 and SOL falling to around $125. Although the top currencies have not yet fallen to the level of April this year, the decline of many blue-chip Altcoin has already caught up with the early bull market last year. Many investors said that their earnings for most of the past six months have been lost in the past few weeks, and they may have to "wear the yellow robe" again.
As of the time of writing, the number of spot currencies on the Binance platform alone that have fallen is 1,150, while the number that has risen is only 106, accounting for less than 10%.
The crypto market is experiencing a normal ups and downs, but in the past, when BTC rose, the altcoins would make money. But now, when BTC falls a little, the Altcoin will be beaten. Recently, the Altcoin have been falling continuously, and there are many negative factors behind it.
1. Bitcoin spot ETF has a large outflow and a decrease in inflow
On June 23, according to HODL15Capital monitoring, the US Bitcoin spot ETF sold 7,690 BTC in the past week (Week 24).
On June 21, the U.S. Bitcoin spot ETF saw outflows for five consecutive days, with the total outflow exceeding $900 million in the past week. Grayscale GBTC and Fidelity FBTC were the largest buyers, with only BlackRock IBIT buying.
As shown in the above figure, Bitcoin inflows were significant in January, February, and March, corresponding to the encouraging rise in the crypto market. However, in April, there was no negative inflow, and the crypto fell sharply during the same period. Although there was an inflow in May and June, the flow rate dropped sharply and the inflow trend slowed down significantly.
Similarly, the 10x Research report noted that Bitcoin spot ETFs saw large outflows (average outflow of $660 million over 5 days) as the overall net outflow across various sectors (stablecoins, futures leverage, ETFs, etc.) was $2.4 billion, the third week of declining net flows since the ETF was launched in January 2024.
2. Large-scale token unlocking and selling pressure
According to Token Unlocks data, starting from June 24, mainstream crypto projects across the entire network will unlock a total of US$188 million worth of tokens in the next 7 days.
Previously, tokens worth US$363.79 million were unlocked from June 10 to 16. One week after May 26, OP, DYDX, SUI and other tokens will be unlocked in a one-time large amount, with a total release value of approximately US$380 million.
10x Research stated in its market analysis report that the sharp drop in Altcoin prices was due to the market's difficulty in digesting the huge token unlocking of a series of projects, totaling US$483 million, including Aptos ($97 million), IMX ($51 million), STRK ($75 million), etc.
Early investors and venture capital firms appear to be under pressure to cash out, leading to an overall market decline and dragging down Bitcoin prices.
In addition, Bitcoin miners have begun selling their Bitcoin inventory. Since June, Bitcoin miners have sold more than 30,000 BTC (about $2 billion), the fastest pace in more than a year, mainly due to the tightening of miners' profit margins caused by the halving.
3. Investors actively sell off and FUD sentiment spreads
On June 23, Bank of America reported that investors withdrew $300 million from the gold market, $400 million from the cryptocurrency market, and $15.8 billion from cash last week.
On June 19, the German government wallet sold about 6,500 BTC. The crypto wallet has held nearly 50,000 BTC since February 2024. These funds were seized from the pirated movie website operator Movie2k and currently still hold 43,359 BTC, worth $2.83 billion.
At the same time, Santiment data showed that during Bitcoin's sideways trading at the $65,000 mark, there was "persistent FUD" circulating on the social media platform X, mainly due to traders' continued bearishness. In addition, its weighted sentiment index (an indicator that measures the volume of Bitcoin mentions on X and compares the proportion of positive and negative comments) has been negative since May 23.
4. Macro level: unclear supervision and policy pressure
On June 21, the judge of the US SEC hinted at rejecting the motion to dismiss the Kraken case, indicating that the exchange's motion would be rejected, pointing out that crypto assets may be sold as securities on its platform. On the same day, a California judge ruled that the case of Ripple CEO suspected of securities fraud would continue to be heard, and dismissed four other class action claims.
On June 20, the U.S. Commodity Futures Trading Commission (CFTC) began investigating the cryptocurrency business of Chicago-based trading firm Jump Crypto, including its trading and investment activities.
In addition, the crypto market is also facing the potential impact of the US presidential election. Although there have been reports that Biden may "soften" his attitude towards cryptocurrencies, his rival Trump has clearly stated that he is crypto-friendly, so it is not ruled out that Biden may increase the risk of suppressing the crypto market during the campaign.
5. Binance’s new coins perform poorly
Recently, the community has questioned Binance's listing of coins and the poor performance of new coins after launch. At the same time, it has questioned the inflated prices of VC coins and the obvious bubble, which has had a negative impact on the long-term development of the entire industry.
According to HC-Capital, among the newly listed tokens on Binance in 2024, the tokens that have fallen by more than 80% from their historical highs are: $AEVO, $PORTAL, $STRK, $SAGA, $DYM; the tokens that have fallen by more than 70% are: $AXL, $MANTA, $OMNI, $PYTH, $PIXEL, $TNSR, $ALT; the tokens that have fallen by more than 60% are: $AI, $BOME, $WIF, $XAI, $JUP, $METIS, $REZ, $ETHFI; the tokens that have fallen by more than 50% are: $TAO, $ENA, $BB.
Additionally, Binance is still awaiting the outcome of its appeal against a $4.4 million fine imposed by Canada on June 20 for failing to comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations.
Recently, Binance executives were detained and seized by the Nigerian government, and the Nigerian High Court also dismissed the Binance executives’ detention lawsuit.
6. Reduced income levels for project owners and miners
According to media reports on June 24, the Ethereum network Gas fell to its lowest level since 2020, and Bitcoin miners' income hit an all-time low.
Recently, Ethereum network Gas has fallen to its lowest level since 2020. Gas prices have caused Ethereum's consumption rate to drop to its lowest level in 12 months. According to data from ultrasound.money, due to the low consumption rate, Ethereum is currently slightly inflated, with its seven-day average supply growth rate of 0.56% per year.
In addition, after this round of Bitcoin block reward halving event, the income of Bitcoin miners in TH/s (7-day MA) has hit a record low in the past two months. In addition to the halving, another possible reason for the reduction in miners' income is the small number of new wallets entering the Bitcoin ecosystem, which is currently at the lowest level since 2018 (7-day MA).
summary
The recent continuous plunge in the crypto market has caused investors to doubt the current bull market, believing that it is a false bull market. Many blue-chip Altcoin are gradually falling to the initial level of the bull market in October and November last year, and some have even fallen to a deep bear market.
There are many internal and external factors behind the market decline, and the "cutting the boat to find the sword" investment method seems to be no longer applicable to the new stage of the crypto. At this time, Buffett's famous saying is confirmed: It is true that there are companies with high moats that are worth investing in, but don't forget that there are ferocious crocodiles, pirates and sharks guarding them.
