Where Is The Bottom?

Unforgiving Market Conditions and External Pressures Raise Concerns Amid German Bitcoin Offloading and Upcoming Mt. Gox Repayments

GM Anon!

What a week it’s been! Bitcoin’s price has been plunging, causing a cascade of liquidations and shaking the market. Nearly over $700M in leveraged positions were liquidated within a day as Bitcoin’s price fell below $54K impacting over hundreds of thousands of traders. 

This sharp downturn, described as one of the most significant since FTX, has raised concerns about Bitcoin dipping further into the $52K range, with some analysts even predicting lower figures. Ethereum and Solana haven’t been faring well either, affected by the broader market downturn and additional selling pressures.

The largest liquidation event since the FTX collapse. Source.

Major Key Metrics

During this period, it's important to note that funding rates have become significantly negative. 

  • When funding rates for Bitcoin turn extremely negative, it means many traders are betting that Bitcoin's price will drop, and they are willing to pay a fee to those betting the price will rise. 

  • This usually signals a very bearish market sentiment. 

  • However, if the market becomes too bearish, it could lead to a sudden price increase if traders rush to close their bets on the price falling, leading to a short squeeze. So beware if you’re aggressively shorting the market.

Bitcoin has dropped below its 200-day SMA, signaling a potential shift to a foreseeable downtrend. 

  • Upcoming U.S. non-farm payrolls data may impact market sentiment, possibly stabilizing prices if the labor market weakens. Overall, cautious market sentiment prevails, with predictions of BTC potentially dropping to $51,500 in the short term.

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What’s The Cause? 

The German government has been offloading hundreds of millions in Bitcoin, which even led Justin Sun to make an offer on Twitter to purchase the government-held Bitcoins.

This offloading by the German government has added to the market's volatility, contributing to the downward pressure on prices. 

  • There’s also concern over the upcoming Mt. Gox repayments, which could introduce significant sell pressure with over $9.4B worth of Bitcoin potentially hitting the market. 

  • Not all is lost though, some in German politics such as Joana Cotar have called for the government to cease it’s intense selling.

Looking To The Future

Since March, the market has been particularly unforgiving for traders. The relentless volatility has caused multiple false breakouts, with gains quickly retracing. 

  • Although the bull market likely isn't over, predicting the end of this turbulent period has been challenging due to various external factors influencing the market. 

  • Many anticipate that the upcoming US elections could lead to increased monetary stimulus, potentially reviving the market and ushering in new all-time highs. 

However, this outcome remains uncertain. Additionally, global economic conditions, regulatory changes, and geopolitical tensions continue to play significant roles in shaping market sentiment and direction, adding to the complexity of timing the market's recovery. Keep your eyes peeled for when global liquidity starts to turn up!

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Other Major Developments This Week Include…

A major regulatory breakthrough occurred when Judge Amy Berman Jackson dismissed key SEC claims against Binance, including the assertion that crypto tokens are securities. This ruling marked a pivotal moment in the ongoing regulatory battle raging in the US.

Meanwhile, Circle made headlines by becoming the first global stablecoin issuer to obtain an Electronic Money Institution license under the EU's MiCA crypto law, signaling its aggressive plan to expand and stay relevant to European users. 

A major development this past week was the sharp decline in Bittensor’s TAO. TAO experienced a dramatic downturn after a severe security breach. An $8M wallet drain attack led to a 15% decline in TAO’s value, causing widespread concern among investors. In response to the attack, Bittensor temporarily halted its network to prevent further damage and investigate the security lapse. 

Polkadot spent almost $87M in the first half of 2024, with $37M allocated to marketing activities like influencer payments and logo placements. 

  • This marks a 140% increase from the $27M spent in the latter half of 2023. The spending has faced criticism, but insiders argue it's necessary for growth and typical for the industry. Polkadot's treasury, replenished by newly issued DOT, is expected to last. 

  • Despite challenges, including criticism and past layoffs, DOT's value has increased by 5% since the spending report was released.

And Checking In On The Degens…

The trading volume has seen significant peaks on June 19th, June 27th, and July 1st, reaching around $150M. 

  • Solana and Ethereum are the primary contributors to this volume, indicating their dominant roles in the DEX ecosystem. 

  • Solana, in particular, is leading significantly with 73.6% of the users, followed by Ethereum with 16.3%. Other chains like Base, BSC, and Avalanche hold much smaller shares of the user base.

Checking in on what major smart money holdings believe are the strongest plays by looking at the top holdings according to ChainEDGE, focusing on the Ethereum ecosystem, Pepe leads the charge with nearly $22M, while Banana ($1.51M), Trump($1.48M), and Brett($769K) also seeing significant positions.

Major smart money holdings on Solana include Michi($3.25M), Wif($3.87M), and closely following are Billy($2.51) and Popcat($3.62M).

Actionables: Hyperlane

The era of major airdrops may be winding down, but a few notable ones remain, marking the close of this chapter in crypto history. 

One such anticipated airdrop is from Hyperlane.

  • Hyperlane offers a groundbreaking, open-access interoperability layer designed specifically for the modular blockchain ecosystem. 

  • It allows users to integrate Hyperlane into any blockchain environment, whether it's a layer 1, rollup, or app-chain, facilitating seamless communication between different blockchains. 

  • With a strong emphasis on flexibility, Hyperlane's architecture is built with modularity in mind. Its standout feature is the interchain security modules, which enable developers to customize and enhance their security protocols according to specific application needs.

  • Competing directly with LayerZero, Hyperlane has attracted significant financial support, raising approximately $20M from prominent investors including CoinFund, Galaxy Digital, Circle, Figment, Kraken Ventures, Blockdaemon, and NFX.

There are numerous actions to get going with Hyperlane, but we’ll focus on two that will get you qualifying with this protocol. 

Action One: Boost Source and Destination Chain Numbers on Minter.Merkly

  • Visit Merkly and be sure to have selected Hyperlane in your chosen.

  • Increase your ‘source’ and ‘destination’ chain numbers by minting NFTs on multiple blockchains. Take note, best to avoid Ethereum due to its high gas fees.

Action Two: hNFT Mint & Bridge

Begin by accessing the hNFT Mint & Bridge and connecting your wallet securely.

  • Select the network where you intend to mint the NFT on the left and choose the target network for NFT transfer on the right. Proceed by clicking the "Mint" button.

  • Upon successful minting, a confirmation dialog will appear indicating the completion of the minting process.

  • Proceed to click on "Bridge" to initiate the NFT transfer to the designated network. Confirm the transaction to finalize the process.

  • Once the transaction is successfully completed, a confirmation window will notify you of the successful transfer.

  • This method ensures efficient management of NFT transactions across various blockchain networks through the Cryptorank Omni dApp.

Additional resources

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That wraps up today's edition! We hope you enjoyed today’s issue! Till next time anon.

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