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On August 3, the largest cryptocurrency Bitcoin fell to as low as $60,504.1 after the July U.S. jobs report raised concerns that the world's largest economy is at risk of recession.

As of press time, the latest price of Bitcoin has slightly rebounded to $61,600. Since hitting a high of $70,000 on July 29, Bitcoin has fallen nearly 12% from its high in 5 days.

Data shows that in the past 24 hours, the number of people who have been liquidated in the cryptocurrency market has reached 93,000, with a total liquidation amount of US$304 million. The CMCCrypto Fear & Greed Index indicator shows that market sentiment has shifted from fear to greed, and analysts believe that the market may be at risk of a correction. At the same time, a large amount of recent or potential selling pressure has caused a sharp drop in Bitcoin.

The cryptocurrency market is intensifying its volatility, with a 5-day drop of nearly 12%.

Bitcoin, the largest cryptocurrency, fell as low as $60,504.1 after the July U.S. jobs report sparked concerns about the risk of a recession in the world's largest economy. Smaller tokens with fewer transactions, such as Solana and Cardano, fell even more. Since hitting a high of $70,000 on July 29, Bitcoin has fallen nearly 12% in five days. According to Coinglass data, the number of people who had their positions liquidated in the cryptocurrency market in the past 24 hours reached 93,000, with a total liquidation amount of $304 million. At the same time, the number of liquidations in the cryptocurrency market has also been gradually climbing since July, and the market volatility has increased significantly. The CMC Cryptopto Fear & Greed Index, which measures the sentiment of the cryptocurrency market, has returned to above 50 since mid-July, and the market sentiment has shifted from fear to greed. Analysts believe that the re-entry of the indicator into the greed range may be a warning of overheating in the market, and the cryptocurrency market price index may have been too high, with a risk of a correction.

(The trend of liquidation amount in the cryptocurrency market. Source: Coinglass)

(CMCCrypto Fear&GreedIndex indicator. Source: coinmarket cap)

Dan Dolev, senior analyst at Mizuho Securities, said: "Bitcoin is not the safe-haven that many people hope it will be. If unemployment rises and people lose their jobs, they will have to liquidate their coins."

Matthew Graham, founder and managing partner of RyzeLabs, said: "In the short term, there are several factors currently affecting the price of Bitcoin, including the possibility of lower interest rates, the US presidential election, and the potential impact of cryptocurrency policy reforms under Kamala Harris's administration. The market is keenly assessing the possibility and potential consequences of such a policy shift."

In addition, the overall market value of the cryptocurrency market has also shrunk significantly recently. Since July 22, the overall market value of the cryptocurrency market has decreased by about US$290 billion (about RMB 2.08 trillion) in 10 days. Compared with the peak of the total market value of US$2.77 trillion created on March 14 this year, it has decreased by US$580 billion.

(Overall market value of cryptocurrency. Source: coinmarketcap)

Alpha BTC, a well-known cryptocurrency market analyst, said: "If Bitcoin cannot quickly return above $63,000, market participants will be in trouble. The price of Bitcoin may see a deeper correction, setting a downside target between $58,000 and $55,000."

Selling pressure surges

It is understood that for weeks, many investors have been looking forward to receiving billions of dollars of Bitcoin from Mt.Gox, which has put pressure on the crypto asset market and the creditors who received the Bitcoin may carry out a large-scale sell-off.

After years of waiting, creditors of Mt.Gox are beginning to receive partial repayments of their approximately $8 billion in cryptocurrency. Mt.Gox, once one of the world's largest cryptocurrency exchanges, went bankrupt after being hacked. According to a post on the Kraken exchange's social media platform, Kraken has distributed bitcoin and cash from Mt.Gox assets. A Kraken spokesperson confirmed the distribution but declined to comment on the specific amount.

Another exchange, Bitstamp, is also working with custodians and announced that it will begin returning bitcoin, cash and ether starting July 25. The exchange said the recipients will have full control of the assets within a week, also without providing a specific amount.

The bitcoin distribution has sparked weeks of concerns that creditors might sell the tokens, overwhelming demand. Still, according to analyst Raghuram, creditors are unlikely to sell most of the tokens they recovered because they have already made huge profits.

Just days after bankrupt cryptocurrency exchange Mt. Gox completed its first repayment to creditors, crypto lender Genesis Global and its related companies completed their bankruptcy reorganization and plan to begin distributing about $4 billion in crypto assets and cash to creditors.

As a cryptocurrency lender, Genesis Global has been severely affected by the turmoil in the crypto market in recent years. In 2022, Genesis Global suffered hundreds of millions of dollars in losses, mainly due to its association with the failed crypto hedge fund ThreeArrows Capital. In the end, Genesis Global filed for bankruptcy protection in early 2023 and was one of the many cryptocurrency lenders that went bankrupt in the last round of cryptocurrency bear market. It is reported that the local court finalized the amount of compensation in May, and this decision also made it almost impossible for its parent company Digital Currency Group to get any return in this bankruptcy.

On Friday, August 2, according to a statement from Genesis Global, Bitcoin creditors will receive 51.28% in-kind compensation, Ethereum creditors will receive 65.87% compensation, and Solana creditors will receive 29.58% in-kind compensation.

It is worth mentioning that the German government is also selling cryptocurrencies seized from criminal activities, and the intensity and speed of the sales are even more exaggerated. Blockchain data from Arkham Intelligence shows that the Bitcoin wallet associated with the German authorities has been sold out, with only 0.007 Bitcoins worth $412 left in the wallet. The wallet sold nearly $3 billion worth of Bitcoin in just two weeks from July 1 to 13. Coinglass data shows that due to the German government's sale of a large number of Bitcoins, the total amount of liquidation on the entire network on July 4 exceeded $500 million, of which the amount of long orders liquidated reached $416.5 million, which also became the largest single-day liquidation amount in the second half of 2024.

(Source: arkham intelligence)

It is understood that in January 2024, the police in Saxony, eastern Germany, announced the seizure of nearly 50,000 bitcoins, which were worth about $2.2 billion at the time. The Saxony police said that the seized bitcoins were "the largest amount of bitcoins seized by law enforcement agencies in the Federal Republic of Germany to date."

As for the German government's massive sale of Bitcoin, German Bundestag member Joanna Cotard said that the government should not sell Bitcoin, but should continue to hold this token as a "strategic reserve currency."

Editor: Ye Shuyun

Proofreading: Ran Yanqing

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