Today (July 4), Bitcoin retested its lows and briefly fell to below $58,000, hitting a new low in nearly two months, as shown in the figure below.
Then this position seemed to break the psychological defenses of many retail investors. Some even described it as a "plunge", and some hoped to find some reasons for the decline to comfort themselves. Therefore, some people attributed the main reason for this decline to the Mt. Gox incident.
As Bitcoin fell, a total of 102,395 people were liquidated in the last 24 hours, with a total liquidation amount of US$267 million, including US$237 million in long positions and US$29.44 million in short positions, as shown in the figure below.
So, is Mt. Gox the main cause of this decline?
First, let’s take a brief look at the Mt. Gox incident. Mt. Gox is a CEX based in Japan and the largest crypto exchage from 2010 to 2014. But in 2014, they suffered several hacker attacks, and a total of 744,408 BTC were reportedly stolen, which directly led to the closure of the exchange (filing for bankruptcy protection).
Although it has been declared bankrupt, Mt. Gox still has 142,000 BTC, 143,000 BCH and 69 billion yen ($510 million). Therefore, the Japanese court decided to compensate customers affected by the hacking incident. The original plan was to make compensation in October 2023, but it was later postponed to October 2024. Currently, the asset custodian is preparing to distribute these assets to creditors, and their recent focus is to verify the identity and accounts of creditors to facilitate repayment.
In 2014, the price of Bitcoin was less than $500. Now it is $58,000. Therefore, for those who can get the compensation, their income has directly reached hundreds of times. The compensation will be made in Bitcoin instead of legal currency, so some people are worried that these people will sell the Bitcoin for profit after receiving the compensation.
Of course, there is another point of view at the same time. Some people believe that those who receive compensation are basically early users of Bitcoin. Most of these people should have a firm belief in Bitcoin. Even if they receive compensation, they will not choose to sell it immediately.
As for which view is right, it is hard to say. It depends on which view you are inclined to. But the Mt. Gox issue has been unresolved, which is indeed a potential negative for the market. So, if you attribute the reason for this decline to this incident, then it seems to be valid (if you must find a reason for the decline). But I personally prefer to attribute the recent market decline to the fundamental problem: the problem of insufficient liquidity (lack of new purchasing power) that I have talked about several times in my previous articles.
If you are more concerned about this, you may add Mt. Gox's wallet address to the watch list, because the assets in these wallet addresses are public and transparent. You can further understand the progress of Bitcoin compensation by monitoring its asset trends. On May 28 this year, Mt. Gox's cold wallet address had transferred all 141,686 BTC and collected them into 3 wallet addresses, each containing about 47,000 BTC. As shown in the figure below.
Monitoring and tracking the balance changes of these wallet addresses is actually very simple. You can directly use the Arkham tool introduced by Huali Huawai before. You can enter the specific wallet address above in the input box of the tool website to search and see the details, or you can directly enter Mt. Gox to search (because Arkham has already collected and marked these wallets). As shown in the figure below.
As Bitcoin falls, Altcoin have fallen even more in recent months, and many have even been cut in half. So, do Altcoin really have no Altcoin in this bull market?
That depends on the perspective from which you view the opportunity!
From the perspective of VC, even though the tokens of some corresponding projects have fallen a lot, many institutional investment projects still have relatively high unrealized profit benchmarks, which will also form a certain potential selling pressure and also affect market sentiment. We randomly found a few projects with high FDV at present and simply listed the data, as shown in the figure below.
From the perspective of retail investors, on the one hand, it seems that it has become more complicated to select projects in this round of bull market, because there are too many Altcoin. In the past month (June 2024), for example, nearly 322,743 new tokens were created on the Ethereum chain (this is only the data of the Ethereum chain). As shown in the figure below.
On the other hand, many new projects have very high valuations when they are launched. Currently, the issuance volume of VC coins with low circulation volume/high FDV has reached billions, and they are also facing the selling pressure of various tokens being unlocked in large amounts. As shown in the figure below.
Under this overall market atmosphere, coupled with the core problem of insufficient liquidity in the current market that we mentioned above, it is natural for the prices of some assets to have been pushed up (hyped) to a certain level from the beginning of the year to date with the help of major narratives such as ETFs, and then to fall back.
Of course, this decline in BTC will lead to a sharper decline in altcoins. Again, if you believe that the bull market is still here, then just be patient; if you still have a soft spot for altcoins, such as the altcoins that you have been paying attention to but "cannot afford", then you can also consider picking up some in batches.
At this stage, it is still a volatile market, and it may continue to fluctuate in the range of 58,000-63,000 US dollars for a while. If I have to guess the price range, then I think the probability of BTC falling below 57,000 US dollars in the short term is not high. As for how long the current volatile market will last, it is hard to say. Combined with the minutes of the June 2024 monetary policy meeting released by the Federal Reserve in the early morning of July 4th, Beijing time, the short-term trend will first look at the non-agricultural data and unemployment rate data of the United States on July 5th (8:30 pm Beijing time). I personally continue to be optimistic about the long-term trend.
If you like to do short-term trading, then whether you use fundamentals, news, or technical aspects, it is recommended that you develop a trading methodology (trading strategy) that suits you.
If you cannot bear such market fluctuations, then you must learn to control your trading emotions and don’t follow the crowd. I remember that we shared a point of view in the article a long time ago: If you are struggling to make a choice, just choose BTC/ETH. This is the investment path that is least likely to go wrong in the crypto field. The rest is left to time and patience.
Most people will never be able to own 100 bitcoins like they did 10 years ago. Most people also seem unable to hold 1 full bitcoin forever after 2025.
Why are they called retail investors? Because they always cannot hold on!
