The decentralized finance (DeFi) sector has seen a sharp decline, with most tokens dropping between 18% and 23%, marking their worst single-day performance since April. This sell-off was triggered when Jump Crypto, the crypto division of Jump Trading, began moving millions of dollars to exchanges, raising investor concerns.
Rising recession fears contributed to significant sell-offs in U.S. equity markets, with the unemployment rate increasing to 4.3% in June. This led to declines in Bitcoin and Ethereum of 10% and 20%, respectively, as investors shifted about $780 million out of long positions in favor of safer assets like bonds.
Key DeFi tokens, including Maker, Lido DAO, UniSwap, Aave, and Chainlink, were among the hardest hit. CoinGecko data indicates that most tokens in the DeFi category experienced substantial losses.
Jump Crypto's movements involved transferring tens of millions in USDC, USDT, and Ethereum between its wallets and exchanges such as Coinbase, Gate.io, and Binance. It is unclear whether the firm plans to liquidate part of its $243 million in crypto holdings.
Jump Crypto has faced legal challenges related to its involvement in the collapse of TerraUSD and is under investigation by the SEC and CFTC for alleged market manipulation. While these investigations do not imply wrongdoing, they add to the regulatory scrutiny facing the firm.
