The crypto market is experiencing significant fluctuations, with multiple factors influencing future trends.

The crypto market in July failed to rebound as expected and instead encountered a significant drop. Multiple negative factors compounded, leading to a decline in Bitcoin prices and a comprehensive downturn in the entire market. Nevertheless, some positive factors still injected hope into the market, and many observers believe that the crypto market may usher in a turnaround in the fourth quarter of 2024.

Major Pressures Facing the Current Market

Mt. Gox compensation triggers a wave of selling.

The compensation issue of the Mt. Gox incident has triggered panic in the market. The potential selling pressure of over 140,000 BTC and BCH had previously caused the BTC price to fall to around $60,000 by the end of June. After the compensation officially began in early July, BTC further broke below the key support level of $60,000.

During this process, BTC miners have shown signs of capitulation. Historical experience indicates that this often means the price may have bottomed out. Some analysts believe that market participants may have underestimated the severity of the BTC price decline. The current market leverage level is close to historical highs, but the range of time is relatively long, and extreme washouts have not yet occurred.

Some opinions suggest that BTC may experience a larger pullback, potentially dropping to the $40,000 range. Such a pullback could have a significant impact on the market, requiring several months of consolidation to recover the upward trend.

The German government intensifies market pressure by selling off.

The German government recently transferred more than 10,000 bitcoins it held in batches to exchanges, causing the price of bitcoin to briefly fall below $55,000. Data shows that the German government's selling plan is nearly half complete, reducing its bitcoin holdings from nearly 50,000 to 27,461.

Despite the market downturn, data shows that there was still a significant inflow of funds into digital asset investment products last week, reaching $441 million. Among them, Bitcoin investment products accounted for the largest share, at 90%. Regionally, the inflow of funds mainly came from the United States, while Germany saw an outflow of funds.

Miners face survival challenges

The decline in Bitcoin prices has put tremendous pressure on miners. Surveys show that when the price of Bitcoin drops to $54,000, only a few high-efficiency mining machines can remain profitable. To cope with cash flow issues after the halving, mining companies have continued to sell off Bitcoin, with 30,000 BTC entering the market in June.

Fortunately, as small and medium-sized mining farms gradually shut down, the difficulty of Bitcoin mining has started to decline, and the selling pressure on miners has eased. Data shows that by the end of June, the over-the-counter trading volume of mining companies had significantly decreased, alleviating the selling pressure.

Positive Factors Worth Noting

FTX repayment plan may drive market up

FTX's repayment plan may become a significant positive for the market. According to the plan, the total value of assets available for distribution by FTX is estimated to be between $14.5 billion and $16.3 billion, exceeding its liabilities. Once approved, FTX will repay creditors from the fourth quarter of 2024 to the first quarter of 2025.

Some analysts believe that considering most FTX customers are cryptocurrency enthusiasts, this fund of up to $16 billion is likely to flow into the crypto market, becoming an important factor driving price increases.

The expectation of interest rate cuts is rising.

The Federal Reserve's interest rate policy has a significant impact on Bitcoin prices. Although the Federal Reserve Chairman stated that the timing of an interest rate cut is still uncertain, the latest economic data shows a slowdown in economic growth, and market expectations for a rate cut are heating up. According to observation tools, the market expects the probability of the Federal Reserve cutting interest rates in September has risen to 73.6%.

The new accounting standards will soon take effect.

The accounting rules for cryptocurrencies released by the Financial Accounting Standards Board of the United States will take effect after the end of 2024. This means that companies holding Bitcoin or Ethereum will be able to record the fluctuations in their coin values at fair value. This change is expected to promote further compliance in the crypto market and attract more mainstream financial market funds.

A Review of Bitcoin Price Trends After Each Halving

The price trends of Bitcoin after each halving are different. After the second halving on ( in 2016, Bitcoin began a long-term rise following a brief pullback. After the third halving on ) in 2020, the market experienced a 3-month period of fluctuation before starting to rise.

Currently, the market generally expects that Bitcoin will rise after the halving, but the actual situation needs further observation. Regardless of how the future market behaves, investors should remain vigilant and adjust their strategies in a timely manner based on market changes.