According to The Block: Bitcoin and Ether experienced significant declines on Monday morning, with Bitcoin dropping 16.53% and Ether falling 23.75%. This selloff brought Bitcoin to its lowest level since February, trading at $49,883, and Ether to its lowest level since January, trading at $2,186. The broader cryptocurrency market saw a decline of 18.2%, with major tokens like BNB and XRP also experiencing significant losses.Key Factors Behind the DropSeveral factors contributed to the market's downturn:Market Sentiment: The selloff appears to be led by Ether, as large investors unwind their positions in the Grayscale Ethereum Trust (ETHE) amidst growing uncertainty.Economic Data: Recent payroll numbers revealed only 114,000 jobs added, stoking fears of a recession. This news, combined with significant stock market declines, including a 2.43% drop in the Nasdaq and a 1.84% drop in the S&P 500, added to market anxiety.Global Market Reactions: Japan's Nikkei 225 and Topix indices dropped around 7% amid rising concerns about global economic conditions.Jump Crypto Activity: Over the weekend, Jump Crypto moved large amounts of crypto assets, including Ether and USDT. Speculation suggests this may be linked to a U.S. Commodity Futures Trading Commission investigation, potentially indicating a broader market exit.US Election ImpactUncertainty surrounding the upcoming U.S. presidential election also weighs on the crypto market. Vice President Kamala Harris has seen increasing approval ratings, while former President Donald Trump, a known crypto supporter, sees declining influence. The addition of David Plouffe, a former Binance advisor, to Harris's campaign team signals potential engagement with the crypto community, though investor sentiment currently favours Trump.Market OutlookInvestors are closely monitoring the Jump Trading situation, election developments, and potential market corrections. With economic and political uncertainties looming, the crypto market's near-term outlook remains uncertain.

Bitcoin (BTC-USD) is having its worst week since the collapse of Sam Bankman Fried’s FTX cryptocurrency exchange in November 2022.

The world’s largest cryptocurrency fell 14.85% through the week ending Saturday, according to Yahoo Finance data, before resuming its decline by another 7% over the last 24 hours amid a larger correction across all markets.

The price of the digital asset also briefly tumbled below $50,000 to its lowest price since February. It has lost more than $13,000 in value over the last seven days.
Ether (ETH-USD), the second-largest cryptocurrency, is absorbing even heavier losses. It fell more than 15% for the same 24-hour period, briefly seeing its biggest single-day drop since late 2021.

The crypto sell-off comes after a series of events that gave investors new hope that a bull market in digital assets could just be getting started and that the industry was past a severe 2022 meltdown that took down some of the biggest players, including FTX.

In fact, just two weeks ago bitcoin was within striking distance of an all-time high of $74,000 set in March as former President Donald Trump prepared to speak at a bitcoin conference in Nashville.

The stamp of approval from the Republican presidential nominee had many in the industry hyped about a friendlier regulatory approach from Washington, D.C., in 2025 and beyond.

Investors were also excited about Securities and Exchange Commission approvals for big money managers to issue new exchange-traded funds that hold ether — the latest example of how Wall Street is embracing cryptocurrencies.

Those ETFs could make ether a potential staple in 401(k)s, IRAs, and pension plans and grant the digital asset more mainstream acceptance.

Many of the same money managers that received SEC approval already had ETFs that invest directly in bitcoin.

But these new products could drive prices down in the near term, according to one industry watcher.

They could lead to a larger "pile-up of sell orders" that could "destabilize the market further," according to Noelle Acheson, writer of the Crypto Is Macro newsletter.

Last week digital asset ETFs and other investment products saw their first weekly outflows in a month, according to crypto asset manager CoinShares. Those outflows totaled $528 million, with bitcoin accounting for the lion's share of that pressure.

Other observers urged calm Monday about the market chaos. Since the beginning of the year, bitcoin is still up 29%, while ether is 6% higher.

"We are not surprised by Bitcoin’s snap reaction," Gautam Chhugani, a senior analyst covering digital assets for Bernstein, said in a Monday note. He noted that during the start of the COVID-19 pandemic in March 2020 "we had seen a similar Bitcoin reaction."

But "we don’t see any incremental negatives for crypto here. Bitcoin’s institutional adoption trends — ETF inflows and wirehouse/bank approvals remain on track" and "U.S. politics remains a major short term catalyst for crypto markets."

Leverage across the crypto market is exaggerating the recent swoon.

Roughly 307,000 traders have seen over $1.23 billion in crypto derivatives bets liquidated over the past day, according to data provider CoinGlass.
Over a quarter of those losses were in bitcoin, with the largest single wipeout happening to a $27 million valued bitcoin long position on China-based crypto exchange Huobi.
Crypto-related stocks have also taken a beating.
The stock of US-based exchange Coinbase (COIN) is down 6% in Monday trading, while MicroStrategy (MSTR), the largest corporate holder of bitcoin, is down 9%.
Bitcoin miner stocks Marathon Digital (MARA) and Riot Platforms (R
IOT) were down 5% and 4%, respectively.
#BTCMarketPanic #MarketDownturn #RecessionOrDip?

#BTCMarketPanic #MarketDownturn

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Market participants' expectations can be very shaky, as confirmed after the Federal Reserve's latest meeting ended. What information made things so much worse?
The expectations of market participants in financial markets are indeed shaky when information comes to light that was not so much anticipated before.
Of course, the form in which this information is presented also matters. The last Federal Reserve meeting was not so much a turning point in principle, but information was presented that significantly dampened previous optimism.
The monetary policy decision of the US central bank included an economic projection with the key outlook of each central banker for the coming years.
As already mentioned, this was not really anything new. The Fed cut the key interest rate by the expected 0.25 percentage point and the projection was not ground breaking at first glance.
However, the subsequent press conference with Chairman Jerome Powell caused more sobering news.
It was the worst trading day of the year for the overall stock market. We did see slightly deeper declines in August, but this time the net loss for the trading day was more than 3%.
Once similar panic selloffs occur, they normally continue for some time before the market drops to a point where it can gain a foothold.
Why did stock markets face the biggest drop of the year?
To understand the whole situation, we first need to look at the economic projection for the period ahead. First of all, I want to focus on 2025, which is logically the key year.
I will not beat around the bush and we will focus on the most important things: The projection indicates a much higher level of interest rates for 2025.
Since the September projection, the median level has risen from 3.4% to 3.9%. The Fed is also counting on much higher headline and core inflation next year, which is well above the inflation target on the whole.
The estimate for core inflation is 2.5%, up from 2.2%. Headline inflation is also projected to be 2.5% in 2025, up from 2.1%. Recall that inflation targeting is at 2%. Both estimates are therefore 50% above target.
The derivatives market immediately started to write the above, according to which the next cut in rates should come in June. Incidentally, the derivatives market is now prescribing only two cuts for next year. So just copying what the Fed has in its outlook.
However, the above had no effect on the financial markets. There will always be some volatility, but there will not immediately be a drop of more than 3% in the overall market.
So what exactly sent stocks and bitcoin down?
Jerome Powell mentioned during the press conference that rates will go down much more slowly next year. First of all, he acknowledged that the core component of inflation has been going sideways for a long time.
Core inflation in the CPI and PCE have been virtually unmoving for months, which represents so-called stickiness.
This is quite a complicating development for central bankers as they have to balance between the labour market and the price level (dual mandate).
This means micromanaging, trying to find a level of restriction that will secure the 2% inflation target in the long run without hurting the real economy.
In addition, he mentioned that inflation risk has risen. This particular piece of information is, in my view, the key source of concern that triggered the sell-off. It's as if he started shouting that interest rates quite possibly won't fall at all in 2025.
The financial markets, or equities, $BTC , gold, everywhere were counting on base rates falling noticeably below 4% in 2025.
Incidentally, the bitcoin canary initially wrote off just over 6% for Wednesday's trading day. The market therefore held up nicely compared to the overall market.
Only the decline continued and as of Friday afternoon, bitcoin has written off 13% from the high. It's still a price decline within the confines of a correction, but there is clearly a minor panic.
Conclusion
When one invests, one must think twice about why and what one puts the money earned into. And the worst thing ever is when someone carelessly squanders borrowed money.
But I hope there are no such people among my readers, because sooner or later hell will be yours.
Anyway, you have to keep your expectations within certain rational boundaries.
Once "everyone" is chiming in with a higher estimate for the price of bitcoin or for a stock index, no one should be surprised that these predictions don't come true. At least not in the short term.
Markets should be thought of as a complicated organism that is influenced in real time by a theoretically infinite number of variables.
It is therefore impossible to predict exactly how the market will evolve. However, some analysis is still better than investing on the advice of friends at work.
#BTCNextMove #BTC #BTCMarketPanic