In July this year, once the US employment report was released, it instantly triggered concerns about the recession of the world's largest economy. After all, once the world's largest economy enters a rapid recession, the global economy will also decline rapidly.
But what is unexpected is that the first to be affected by this chain reaction is actually the cryptocurrency field. At the beginning of August , cryptocurrencies experienced a rapid decline, and the largest cryptocurrency Bitcoin once fell to $ 60,504.1 . It should be noted that Bitcoin once hit a high of $70,000 on July 29. In a few days, Bitcoin not only failed to maintain the positive situation, but also plummeted 12% from the high point, which was shocking.
A major earthquake occurred in the cryptocurrency market! More than 90,000 people were liquidated...
According to Coinglass data, Bitcoin began to fall continuously from August 1. Within 24 hours, Bitcoin once fell from $ 66,700 to $ 64,000 . The total number of liquidations reached 67,400 , and the total amount of liquidations was $ 230 million. More than 90 % of the users were liquidated due to long orders . After that, the situation intensified. On August 3 , the number of liquidations in the cryptocurrency market reached 93,000 , the price of Bitcoin fell to $ 60,504 per coin, and the amount of liquidations reached $ 304 million.
As Bitcoin plummeted, other cryptocurrencies naturally could not escape the fate of a sharp decline: Solana coin fell by more than 8%; Dogecoin fell by nearly 5%; Ethereum fell by more than 4%; BNB fell by nearly 3%.
We can't help but sigh that in just a few days, Bitcoin has experienced " ice and fire " .
At the end of last month, with the sudden increase in the market value of the concept currency of presidential candidate Trump after he was shot, coupled with the good news of his participation in the Bitcoin Conference, cryptocurrency has become a well-deserved hot topic during the US presidential election. At the 2024 Bitcoin Conference, Trump even said that he would establish a presidential advisory committee on cryptocurrencies and use most of the cryptocurrencies seized by the US government in law enforcement actions to establish a national Bitcoin " reserve " . Trump also declared that if he returns to the White House, he will work to make the United States the world's " cryptocurrency capital " and " Bitcoin superpower " , and promised to mine and promote Bitcoin to consolidate the United States' dominance in the global cryptocurrency field.
The reason why Trump's statement this time has attracted widespread attention in the industry is that he really "slapped himself in the face". As early as 2021 , Trump called Bitcoin a " scam " and believed that it was another currency competing with the US dollar. But now, in order to gain more political capital and campaign support, (The cryptocurrency lobby is said to have donated millions of dollars to his campaign.) , Trump's attitude took a 180-degree turn. Because he publicly voiced his support, the price of Bitcoin once rose to $ 71,000 per coin on the evening of July 29.
But accidents always come before plans. Five days later, the price of Bitcoin had fallen nearly 12% from its peak, and the number of people whose positions were liquidated reached 93,000. Market sentiment seemed to be slowly shifting from greed to fear .
Bitcoin retreats from highs, with complex factors...
However, if we analyze it carefully, we will find that the decline in the market value of cryptocurrencies, especially Bitcoin, is closely related to the complex influences from the outside world.
First of all, the current international political situation is not peaceful, especially the situation in the Middle East is quite tense, which has a profound impact on the trend of cryptocurrency market .
On July 31 , the leader of the Palestinian Islamic Resistance Movement (Hamas), Ismail Haniyeh , was assassinated in Tehran, the capital of Iran. Almost everyone pointed the finger at Israel for this incident, and Iran condemned Israel's assassination on the same day. In addition, according to a report by the Global Times citing the New York Times, three Iranian officials with knowledge of the matter said that Iran's Supreme Leader Khamenei had ordered a direct attack on Israel in retaliation for the assassination of Hamas's Supreme Leader Haniyeh in Tehran . After the above incident, the prices of gold and oil jumped sharply, while risky assets such as Bitcoin fell sharply.
In addition, the United States' ambiguous attitude towards cryptocurrencies has also become a key factor in the decline. According to information from a U.S. blockchain research company, on July 29, the U.S. government transferred $2 billion worth of Bitcoin to a new digital wallet address, and traders speculated that the U.S. government might be selling these seized tokens.
In addition to the above two factors, the large amount of Bitcoin that is being sold recently and may be sold in the future is likely to deal a devastating blow to its market value.
It is understood that in recent weeks, many investors have been looking forward to receiving billions of dollars of Bitcoin from Mt. Gox ( Mt. Gox, once one of the world's largest cryptocurrency exchanges, went bankrupt due to a hacker attack ) Now , Mt.Gox's creditors have begun to receive partial repayments of their approximately $8 billion in cryptocurrencies, which will undoubtedly put tremendous pressure on the crypto asset market, as these creditors who received Bitcoin may sell them on a large scale.
Coincidentally, another exchange, Bitstamp, is also working with custodians and announced that it will return Bitcoin, cash, and Ethereum starting July 25. The exchange said that the recipients will have full control of the assets within a week. However, they did not disclose the specific amount provided.
Cryptocurrency lender Genesis Global and its related companies have completed bankruptcy reorganization and plan to begin distributing about $4 billion in crypto assets and cash to creditors. As a cryptocurrency lender, Genesis Global has been severely affected by the turmoil in the crypto market in recent years. In 2022, Genesis Global suffered hundreds of millions of dollars in losses because of the sudden collapse of the closely related hedge fund Three Arrows Capital. Genesis Global eventually filed for bankruptcy protection in early 2023, becoming one of the many cryptocurrency lenders that went bankrupt in the last round of the cryptocurrency bear market. It is reported that the local court finalized the amount of compensation in May, and this decision also made it almost impossible for its parent company Digital Currency Group to get any return in this bankruptcy. On Friday, August 2, according to a statement from Genesis Global, Bitcoin creditors will receive 51.28% in-kind compensation; Ethereum creditors will receive 65.87% compensation; Solana creditors will receive 29.58% in-kind compensation.
A large number of Bitcoin distribution cases are ongoing, which can't help but cause users to worry about the future market conditions of Bitcoin. People are worried that once creditors start selling these tokens in large quantities, will it overwhelm market demand? However, some industry insiders said that this is only the worst and most extreme result, and creditors are unlikely to sell most of the tokens they have recovered because they have already made huge profits from them.
The virtual currency market continues to be sluggish. Where should investors go in the future?
Many investors cannot accept the current low price of Bitcoin of just over $60,000 and think that "the sky is falling", but they may have forgotten that the decline and downturn in the virtual currency market is not a recent phenomenon. In fact, this depressed state has been going on for a long time.
The cryptocurrency market often sees a chain reaction of "prosperity for all, loss for all". On April 20 this year, Bitcoin completed its fourth halving in history, with the mining reward of the Bitcoin network halved from 6.25 bitcoins to 3.125 bitcoins. The halving event has a significant impact on the income of Bitcoin miners. Because the main sources of income for miners are nothing more than two: mining rewards and transaction fees. For this reason, the halving event directly affects the mining rewards of miners, but the operating costs of miners, such as electricity bills and equipment costs, will not be reduced. The sharp drop in miners' income will inevitably lead to the sale of Bitcoin, and the virtual currency market will naturally face greater pressure.
For example, the second quarter performance report released by Bitcoin mining company Riot Platforms showed that its total revenue in the second quarter was US$70.02 million and its net loss was US$84.45 million. The output of Bitcoin "mining" fell from 1,775 in the second quarter of 2023 to 844, a year-on-year decrease of 52%.
Therefore, the more such times are, the more cautious everyone should be and guard their wallets. The reason why liquidation incidents occur frequently is that cryptocurrency trading usually allows users to trade with leverage, which means that users can borrow funds to amplify their purchasing power, which of course greatly increases trading risks. Once the user's account balance falls below the maintenance margin requirement, the trading platform will automatically execute a liquidation operation, that is, forced liquidation at the market price to avoid further losses. For traders, this usually means huge financial losses. For ordinary investors, it is still necessary to use leveraged trading with caution. Of course, compared with the possible sharp fluctuations in the market in the short term, investors should try to choose a long-term perspective. Long-term holding and focusing on projects with good fundamentals are usually a more prudent investment strategy.
