Bitcoin falls below $54,000, market plummets sharply

On July 5th at noon, the cryptocurrency market suffered a heavy blow. Bitcoin's price fell below $54,000, reporting $53,984, with an intraday decline of up to 7.1%. Ethereum also faced a heavy hit, dropping below $2,850, with an intraday decline of 11%. Other cryptocurrencies generally fell, with several tokens experiencing declines of over 20%, and a well-known token even reached a historic low.

This market fall is expected to lead to approximately $620 million in long contracts being liquidated, which may trigger a larger scale of liquidations.

The reasons for this round of cryptocurrency market crash include multiple aspects:

1. A well-known exchange has started repaying debts, raising market concerns about large-scale sell-offs. According to monitoring, the exchange has transferred approximately 47,228 Bitcoins (worth about $2.71 billion) from cold storage to a new wallet.

2. The German government continues to sell Bitcoin. Since the beginning of June, the German government has sold approximately 7,000 Bitcoins. This morning, the German government transferred 13,475 Bitcoins and has sold 13,000. Currently, the German government still holds over 40,000 Bitcoins.

3. The U.S. government is suspected of starting to sell Bitcoin. On June 27, a U.S. government Bitcoin wallet that had been inactive for a year sent 4,000 Bitcoins to a trading platform.

4. Bitcoin spot ETFs have experienced net outflows for two consecutive days, with a total outflow amount reaching 34.2 million USD. Some analysts believe that the average entry price for ETF buyers is around $60,000 to $61,000, and a potential liquidation wave for ETFs may occur when Bitcoin falls below $60,000.

5. The market lacks new capital inflow. Since the beginning of May, the total market value of stablecoins in the crypto market has been hovering around $160 billion, indicating insufficient liquidity of funds in the market.

6. Bitcoin price fell below the 200-day moving average (DMA) for the first time since August 2023. This breakout of the technical indicator may indicate that the market is entering a correction phase.

The current market situation requires cautious handling and may signal the end of the recent bull market cycle. In the upcoming halving cycle, the Bitcoin market faces significant pressure. Investors need to closely monitor future price trends to assess the next steps for the market.