The crypto market has plummeted and blue-chip copycats have plummeted. What are the negative reasons?

On June 24, the crypto market experienced another sharp drop, with BTC falling below $63,000 and SOL falling to around $125. Although the leading currencies have not yet fallen to the level of April this year, the decline of many blue-chip altcoins has directly caught up with the initial bullish point last year. Many investors have said that most of the profits for the past six months have been lost in recent weeks, and they may be "in yellow" again.

As of this writing, the number of cash currencies on the Binance platform alone has dropped by 1,150, while the number of coins that have risen is only 106, accounting for less than 10%.

It is normal for the crypto market to skyrocket and plummet. However, in the past, the normal operation was for BTC to rise and the altcoins to eat meat. But now, as long as BTC drops slightly, altcoins will be beaten crazily. Altcoins have been falling continuously recently, which is caused by a variety of negative factors.

1. Bitcoin spot ETFs experienced large outflows and reduced inflows

On June 23, according to HODL15Capital monitoring, in the past week (week 24), the US Bitcoin spot ETF sold 7,690 BTC.

On June 21, the U.S. Bitcoin spot ETF experienced fund outflows for five consecutive days, with the total outflow exceeding US$900 million in the past week. Grayscale GBTC and Fidelity FBTC were the top buyers, with only BlackRock IBIT a buy.

As shown in the figure above, Bitcoin inflows were obvious in January, February, and March, corresponding to the encouraging growth in the crypto market. Entering April, there was no negative inflow, and the currency circle plummeted during the same period. Although there was some inflow in May and June, the flow dropped sharply and the inflow trend slowed down significantly.

Similarly, 10x Research reported that Bitcoin spot ETFs experienced significant outflows (average 5-day outflows of $660 million), as the overall net outflows in various fields (stablecoins, futures leverage, ETFs, etc.) were $2.4 billion, This is the third week since the ETF launched in January 2024 that net flows have declined.

2. Large-scale token unlocking and selling pressure

According to Token Unlocks data, starting from June 24, mainstream encryption projects across the entire network will unlock a total of $188 million worth of tokens in the next 7 days.

Previously, tokens worth US$363.79 million were unlocked from June 10 to 16. In the week after May 26, tokens such as OP, DYDX, and SUI will be unlocked in a one-time large amount, with a total released value of approximately US$380 million.

In its market analysis report, 10x Research said that the sharp decline in altcoin prices was due to the market’s difficulty digesting the huge token unlocks from a series of projects, totaling US$483 million, including Aptos (US$97 million), IMX (USD 51 million), STRK (USD 75 million), etc.

Early investors and venture capital institutions appear to be under pressure to cash out, causing the overall market to fall and drag down the price of Bitcoin.

Also, Bitcoin miners have started selling their Bitcoin stocks. Bitcoin miners have sold more than 30,000 BTC (about $2 billion) since June, the fastest pace in more than a year, mainly due to the halving tightening miner profit margins.

3. Investors actively sell and FUD sentiment spreads

On June 23, Bank of America reported that investors withdrew US$300 million from the gold market and US$400 million from the cryptocurrency market last week. , withdrew $15.8 billion from cash.

On June 19, the German government wallet sold approximately 6,500 BTC. The crypto wallet has held nearly 50,000 BTC since February 2024, funds seized from pirated movie website operator Movie2k, and still holds 43,359 BTC, worth $2.83 billion.

At the same time, Santiment Data said there was widespread “sustained FUD” circulating on social media platform Additionally, its weighted sentiment index, a metric that measures the volume of Bitcoin mentions on X and compares the proportion of positive and negative comments, has been negative since May 23.

4. Macro level: unclear supervision, policy pressure

On June 21, the US SEC’s judge in the Kraken case hinted at rejecting the motion to dismiss. The judge hinted that he would reject the exchange’s motion, pointing out that crypto assets may be sold as securities on its platform. . On the same day, a California judge ruled that Ripple CEO’s securities fraud case would continue to be tried and dismissed four other class action claims.

On June 20, the U.S. Commodity Futures Trading Commission (CFTC) began investigating the cryptocurrency business of Chicago-based trading company Jump Crypto, including its trading and investment activities.

In addition, the crypto market is also facing the potential impact of the US presidential election. Although there has been news that Biden may "soften" his attitude towards cryptocurrency, his rival Trump has made it clear that he is crypto-friendly, so it is not ruled out that Biden will step up efforts to suppress the crypto market during the campaign. Risk possibility.

5. The poor performance of Binance’s new currency

Recently, the community has questioned Binance’s listing of the currency and the poor performance of the new currency after its launch. It also questioned that the price of VC coins is artificially high and the bubble is obvious, which will have a negative impact on the long-term development of the entire industry. .

According to HC-Capital, among the newly listed tokens on Binance in 2024, those that have dropped more than 80% from their historical high prices are: $AEVO, $PORTAL, $STRK, $SAGA, $DYM; those that have dropped more than 70% The tokens are: $AXL, $MANTA, $OMNI, $PYTH, $PIXEL, $TNSR, $ALT; the tokens that have dropped more than 60% are: $AI, $BOME, $WIF, $XAI, $JUP, $ METIS, $REZ, $ETHFI; tokens that have dropped more than 50% are: $TAO, $ENA, $BB.

In addition, on June 20, Binance appealed the $4.4 million fine imposed by Canada, and the verdict is pending. The fine was issued for failing to comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations.

Recently, Binance executives were detained and detained by the Nigerian government, and the Nigerian High Court also dismissed the Binance executive detention lawsuit.

6. The income level of project parties and miners has decreased

On June 24, media reported that the Ethereum network Gas fell to its lowest level since 2020, and the income of Bitcoin miners hit a record low.

Recently, Ethereum network gas has dropped to its lowest level since 2020. Gas prices have caused Ethereum’s consumption rate to drop to its lowest level in 12 months. According to data from ultrasound.money, Ethereum is currently experiencing slight inflation due to low consumption rates, with its seven-day average supply growth rate being 0.56%/year.

In addition, after this round of Bitcoin block reward halving events, the income earned by Bitcoin miners TH/s (7-day MA) has hit a record low in the past two months. In addition to the halving, another possible reason for lower miner income is the lower number of new wallets entering the Bitcoin ecosystem, which is currently at its lowest level since 2018 (7-day MA).

Summary

The recent sustained plunge in the crypto market has caused investors to doubt the current bull market and believe that they have encountered a false bull market. Many blue-chip altcoins are gradually falling to the early levels of the bull market in October and November last year, and some have even fallen to deep bear positions.

There are many internal and external factors behind the market decline, and the investment method of seeking a sword at the last minute seems to be no longer suitable for the new stage of the currency circle. At this time, Buffett's famous saying is confirmed: It is true that companies with towering moats are worth investing in, but don't forget that there are ferocious crocodiles, pirates and sharks guarding them.

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