The total network liquidation in a single day reached 267 million USD, and the 9 billion USD selling pressure in Mentougou led to the sharp decline of Bitcoin?

Today (July 4), Bitcoin retested its lows and briefly fell below $58,000, marking a new low in nearly two months. As shown in the figure below.

This position seems to have broken the psychological barrier for many retail investors, with some even describing it as a "crash," while others are looking for reasons for the decline to comfort themselves. Thus, some attribute the main reason for this drop to the Mt. Gox incident.

Accompanying Bitcoin's decline, a total of 102,395 people were liquidated in the last 24 hours, with a total liquidation amount reaching $267 million, including $237 million in long positions and $29.44 million in short positions. As shown in the figure below.

So, is Mt. Gox the main reason for this drop?

First, let's briefly review the Mt. Gox incident. Mt. Gox was a CEX located in Japan and was the largest cryptocurrency exchange from 2010 to 2014. However, in 2014, it suffered several hacker attacks, reportedly losing a total of 744,408 BTC, which directly led to the exchange's collapse (filing for bankruptcy protection).

Although it announced its closure, Mt. Gox still had assets of 142,000 BTC, 143,000 BCH, and 69 billion yen ($510 million). Therefore, the Japanese court decided to compensate the customers affected by the hacking incident, initially scheduled for October 2023, but later postponed to October 2024. Currently, the asset trustee is preparing to distribute these assets to creditors, and their recent focus has been on verifying the identities and accounts of creditors to facilitate repayment.

Back in 2014, the price of Bitcoin was less than $500, and now the price is $58,000. Therefore, for those who can receive compensation, it means their returns have increased by hundreds of times. The compensation will be made in Bitcoin rather than fiat currency, so some people worry that these individuals will sell their compensated Bitcoin for profit.

Of course, there is also another viewpoint. Some believe that those receiving compensation are mostly early Bitcoin users, many of whom likely have a strong belief in Bitcoin and would not choose to sell immediately even if they receive compensation.

As for which viewpoint is correct, it's hard to say; it depends on your perspective. However, the Mt. Gox issue has remained unresolved and is indeed a potential negative factor for the market. So, if you attribute this drop to that issue, it seems plausible (if you need to find a reason for the decline). Personally, I would prefer to attribute the recent market decline to the fundamental issue of liquidity shortage (insufficient new buying power) that has been discussed multiple times in previous articles.

If you are particularly concerned about this, you might consider adding Mt. Gox's wallet addresses to your watchlist, as the assets in these wallet addresses are publicly transparent. You can monitor their asset movements to further understand the progress of Bitcoin compensation. On May 28 of this year, Mt. Gox's cold wallet addresses transferred all 141,686 BTC to three wallet addresses, each containing around 47,000 BTC. As shown in the figure below.

Monitoring and tracking the balance changes of these wallet addresses is quite simple; you can use the Arkham tool introduced in previous articles. You can enter the specific wallet addresses in the input box on the tool's website to see the details, or you can directly search for Mt. Gox (as Arkham has already aggregated and labeled these wallets). As shown in the figure below.

With Bitcoin's decline, many altcoins have seen even larger drops in recent months, with many altcoins experiencing a halving in value. So, does this mean there are no opportunities for altcoins in this bull market?

That depends on what perspective you consider opportunities from!

From a VC perspective, even though some project tokens have already dropped significantly, many projects that institutional investors are involved in still have relatively high unrealized profits benchmarks, which can create some potential selling pressure and also affect market sentiment. We randomly selected a few projects with high FDV and listed some data below.

From a retail investor's perspective, on one hand, selecting projects in this bull market seems to have become more complicated, as there are too many altcoins. For example, in just the past month (June 2024), nearly 322,743 new tokens were created on Ethereum-based chains (this is just the data for Ethereum-based chains). As shown in the figure below.

On the other hand, many new projects launch with very high valuations, and the issuance of low circulation/high FDV VC tokens has reached billions, which also faces the pressure of large unlocks of various tokens. As shown in the figure below.

In this overall market atmosphere, combined with the core issue of insufficient liquidity mentioned above, it is quite reasonable for some asset prices to rise to a certain level due to major narratives like ETFs and then undergo a correction.

Of course, Bitcoin's decline will lead to even sharper drops in altcoins. As I said before, if you believe that a bull market is still ahead, then just remain patient; if you still have a fondness for altcoins, like those you have been watching but feel "out of reach," then you might consider gradually picking some up now.

At this stage, we are still in a volatile market, and it may continue to oscillate within the $58,000 - $63,000 range for a while. If I had to guess a price range, I think the probability of Bitcoin dropping below $57,000 in the short term is low. As for how long this volatile market will last, it's hard to say. Considering the Federal Reserve's release of the minutes from the June 2024 monetary policy meeting early this morning (Beijing time, July 4), we should first look at the non-farm payroll data and unemployment rate data from the U.S. on July 5 (8:30 PM Beijing time) for the short-term trend. Personally, I remain optimistic about the long-term trend.

If you like to engage in short-term trading, whether using fundamentals, news, or technical analysis, it is advisable to develop a trading methodology (trading strategy) that suits you.

If you cannot withstand such market fluctuations, you need to learn to control your trading emotions and not follow the crowd. Remember, we shared a viewpoint in an earlier article: if you are struggling to make a choice, just choose BTC/ETH; this is the least error-prone investment path in the crypto space, and the rest is up to time and patience.

Most people will never be able to own 100 Bitcoins like they could 10 years ago. Most people also seem unable to hold onto a complete Bitcoin after 2025.

That's why they are called retail investors; they can never hold on!