Crypto Market Selloff: Unpacking the Key Drivers Behind the Decline
The cryptocurrency market has seen a sharp downturn, with BTC and ETH both tumbling over 4%, and other major altcoins like XRP, BNB, and SOL also experiencing significant losses.
Bank of Japan Rate Hike Speculation: Despite the Bank of Japanâs assurance that no rate hikes will occur this year, speculation looms over a potential increase in March 2024. This uncertainty has heightened market jitters, particularly around Yen carry trades, which have become a point of concern following the launch of Bitcoin ETFs.
Geopolitical Instability: The crypto market is under additional pressure from escalating global tensions. The ongoing conflict between Russia and Ukraine, coupled with rising fears of a major Iranian attack on Israel, has created an environment of heightened risk aversion among investors.
Lingering US Recession Concerns: Although some believe the US economy is showing resilience, fears of a looming recession persist. Upcoming economic data releases, including the US Consumer Price Index (CPI) and Producer Price Index (PPI), are expected to influence market sentiment further.
Technical Market Weakness: Data from CoinGlass points to potential further downside, with $2 billion in Bitcoin long positions at risk of liquidation if prices dip below $58,600. A weak recovery could lead to even more severe declines, exacerbating the selloff.
US Inflation Data Impact: The release of key US inflation metrics this week could either stabilize or deepen the marketâs woes. The Federal Reserveâs next moves on interest rates hinge on this data, with current predictions favoring a modest 25 basis point cut in September.
In just 24 hours, over $100 billion has been wiped from the global cryptocurrency market cap.
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