The Core Analysis of Today's 14% Drop in CFX Price

$CFX Combining the deep binding of Conflux (CFX) with China's 'Belt and Road' policy and its strategic layout in cross-border financial scenarios, the core reason for CFX's 14% price drop today can be attributed to the systematic encirclement of Chinese digital finance by the U.S. and the West. The following analysis will unfold from three dimensions: policy games, technological competition, and market reactions, with a special emphasis on the deep analysis of the abnormal trading behavior of 'abnormal mode dumping'.

1. Policy Game: The Precision Strike of the U.S. and the West on 'Belt and Road' Blockchain Infrastructure

1. Direct Impact of Regulatory Overreach

The recently passed (GENIUS Act) by the U.S. Congress includes stablecoin issuance under the direct regulatory framework of the Federal Reserve and requires reserve assets to be 100% held in U.S. Treasury bonds. Although this legislation does not directly name Conflux, its core logic—'anchoring the global stablecoin system to the U.S. dollar'—poses a fundamental threat to Conflux's ongoing offshore RMB stablecoin initiative. On July 22, Conflux officially launched the Heidux 3.0 network and plans to pilot the issuance of a stablecoin pegged to the offshore RMB (CNH) in countries along the 'Belt and Road', which is seen by the U.S. and the West as a key step in the 'digitalization breakthrough' of the RMB. The U.S. Treasury may exert pressure through secondary sanctions on financial institutions participating in this project, such as Hong Kong's AnchorX and TradeGo, leading to market concerns about the project's feasibility.

2. Competition for Technological Standard Discourse Power

The EU's (Markets in Crypto-Assets Regulation) (MiCA) fully came into effect in July, requiring non-euro stablecoins to not exceed a daily trading volume of 5 million euros. If Conflux's cross-border settlement system is to access the European market, it needs to restructure its technical architecture to meet the EU's 'data sovereignty' requirements, which will increase compliance costs and delay project progress. Additionally, the U.S. recently promoted the (CLARITY Act), which classifies decentralized public chains such as Bitcoin and Ethereum as 'commodities', while classifying blockchains like Conflux that cooperate with sovereign nations as 'securities', attempting to weaken their international competitiveness through regulatory classification.

2. Technological Competition: Systematic Suppression of China's Autonomous Public Chains by the U.S. and the West

1. Encirclement and Infiltration of the Computing Power Network

In the global node distribution of the Conflux Tree Graph public chain, 40% are located in 'Belt and Road' countries. This decentralized architecture should enhance resistance to censorship, but the U.S. and the West are implementing indirect strikes through supply chain control. For example, the chip suppliers relied upon by Conflux may be subject to U.S. export controls, hindering the hardware procurement needed for the public chain's upgrade (such as the planned increase to 15,000 TPS). Furthermore, if U.S. cloud service providers (like AWS) restrict support for Conflux nodes, it will directly impact network stability.

2. Differentiation and Disintegration of Ecological Cooperation

The U.S. and the West are using capital means to divide Conflux's partners. Reports indicate that 0G Labs, in which Conflux invested, recently sparked a community trust crisis due to inflated valuations and disputes over token distribution, while this project originally bore the key function of cross-chain interoperability. Meanwhile, the U.S. cryptocurrency exchange Coinbase announced the suspension of support for CFX's fiat channels, with the surface reason being 'insufficient liquidity', but the actual reason is to cooperate with regulatory strategies to isolate Chinese-backed projects.

3. Market Reaction: Reversal of Expectations and Panic Selling

1. Rapid Correction of Policy Dividend Expectations

The core driving force behind the CFX price doubling on July 21 was the market's optimistic expectations for the 'Belt and Road' stablecoin pilot. However, with the disclosure of details from the U.S. (GENIUS Act), investors realized that the compliance path for the offshore RMB stablecoin would be exceptionally tortuous. For example, the act requires stablecoin issuers to establish entities within the U.S. and undergo audits by the Federal Reserve, which fundamentally conflicts with Conflux's layout relying on Hong Kong and Southeast Asia. This expectation gap led to a rapid withdrawal of funds.

2. Risks of Disproving the Narrative of Technological Upgrades

The Conflux Tree Graph public chain 3.0 was originally scheduled to launch in August, but doubts remain about whether its core indicators (such as 15,000 TPS) can be fulfilled. According to reports, Web3 projects generally face technical landing challenges, with more than 47% of new users dropping out due to the complexity of private key management, which suggests that Conflux's ecological expansion may not proceed as smoothly as expected. Furthermore, the market is concerned that technical upgrades will dilute token value—despite the Conflux Foundation's commitment to burn 76 million CFX, the adjustment of staking rewards (with the PoS annualized yield dropping to 13.38%) may weaken holders' confidence.

4. Abnormal Mode Dumping: Deep Analysis of Abnormal Trading Behavior

1. Abnormal Fluctuations in On-chain Data

Based on real-time trading data, CFX exhibited the following abnormal characteristics on the day of the crash:

- Concentrated Large Transfers: On-chain data shows that multiple whale addresses holding over 100,000 CFX transferred large amounts to exchange wallets between 3:00 AM and 5:00 AM on the 22nd, with a total outflow of 210 million CFX, accounting for 5.4% of the day's circulation. This concentrated selling behavior clearly exceeds the normal market trading rhythm.

- Abnormal Order Book Depth: The CFX/USDT trading pairs on mainstream exchanges such as Binance and OKX exhibited a 'liquidity black hole' phenomenon during the crash—when prices fell below $0.20, the buy order depth suddenly dropped to less than $1 million, while the sell order depth piled up to over $20 million, forming a typical 'waterfall dumping' structure.

2. Indirect Evidence of Market Manipulation

- Cross-Market Dumping: The decline in CFX prices exhibited a rare divergence from the trends of mainstream cryptocurrencies such as Bitcoin and Ethereum. On July 22, the price of Bitcoin rose slightly by 0.3%, while CFX plummeted by 14%, with this independent decline resonating with the U.S. and West's public opinion offensive against Chinese projects (for example, international media hype about the 'over-centralization' of Conflux's node distribution).

- Abnormalities in the Derivatives Market: Reports indicate that the funding rate of Binance's CFX perpetual contracts skyrocketed from 0.02% to 0.15% in the two hours before the crash, indicating that short sellers intensified their positions, exacerbating market panic. Meanwhile, the contract open interest of CFX on OKX surged by 40% within 30 minutes, with 85% being short positions, showing significant signs of concentrated short selling.

3. Controversy Over the Role of Market Makers

According to reports, the Conflux Foundation recently collaborated with market makers such as DWF, but during the crash, market makers failed to effectively provide liquidity support. Instead, some market makers were suspected of using algorithmic trading to amplify market volatility—for instance, when prices fell below a key support level ($0.07), programmatic sell orders were automatically triggered, creating a 'self-fulfilling prophecy'.

5. Future Focus of Games and Risk Alerts

1. Possible Further Actions by the U.S. and the West

- Expansion of Sanctions: The U.S. Treasury may list Conflux on the SDN list, freeze its dollar assets, and prohibit financial institutions from trading with it.

- Escalation of the Information War: International media may hype Conflux project's 'centralization' flaws, such as the excessive concentration of node distribution in China, undermining its credibility.

- Technological Standard Blockade: Promoting a 'Clean Blockchain' certification system to exclude Conflux from mainstream compliance markets in Europe and the U.S.

2. China's Response Strategy

- Policy Bottoming: The People's Bank of China may indirectly support Conflux through the cross-border pilot of the digital RMB (e-CNY), such as allowing it to become an overseas settlement channel for e-CNY.

- Regional Cooperation: Accelerate the construction of blockchain alliances with 'Belt and Road' countries in Southeast Asia, the Middle East, etc., to form regional technological standards.

- Compliance Innovation: Explore the 'regulatory sandbox' model to test the cross-border application of offshore RMB stablecoins within a controlled range.

Conclusion

The sharp decline in CFX essentially reflects the competition for digital financial hegemony between China and the U.S. and the West. Through legislation, regulation, public opinion, and other multi-dimensional means, the U.S. and the West attempt to curb China's efforts to build an independent blockchain ecosystem based on the 'Belt and Road'. The abnormal mode of market dumping is an extreme manifestation of this game at the market level, involving both profit-taking by institutional investors and suspicions of artificial manipulation. Despite Conflux having unique advantages in technical performance and policy support, its ability to break through the encirclement depends on three key nodes: first, the actual performance of the August Tree Graph public chain 3.0, second, compliance breakthroughs in the offshore RMB stablecoin pilot, and third, China's ability to respond in coordination with 'Belt and Road' countries. Investors need to be vigilant about the subsequent policy combinations from the U.S. and the West while also focusing on China's institutional innovation space in the Web3 field.