Written by: 1912212.eth, Foresight News
The crypto market is not peaceful, especially the market performance in the past week has made many investors feel the bloody market. BTC has fallen sharply for three consecutive days since August 2, from $65,000 to $57,000. At 2 pm yesterday, BTC finally lost the $50,000 mark after a continuous decline, and the lowest price fell to $49,000, and the market sentiment fell into despair. According to Alternative data, the crypto panic and greed index fell below 20, hitting a new low since August 2022 (extreme fear). BTC fluctuated around $50,000 for several hours thereafter, and it did not climb steadily from around $52,000 until 9 pm that day, rising strongly all the way to break through $53,000, $54,000, and $55,000. At 8 am today, it even rebounded to $56,000, and then fluctuated up and down at this position. BTC has ended its four-day decline, and finally stabilized its price performance from falling to rising.
ETH also rebounded from $2,111 to around $2,500, ending a seven-day losing streak. Altcoins also rebounded on a large scale, with TAO soaring by more than 33% in 24 hours, and ARKM and AAVE both rising by more than 20%. In terms of contracts, according to Coinglass data, the market had a liquidation of $173 million in the past 12 hours, with long orders liquidating more than $60 million and short orders liquidating more than $100 million.
After the macro situation deteriorated in the past few days, it quickly spread to the crypto market. Amidst wailing and panic, the market rebounded. What are the factors that affected it?
US and Japanese stock markets stabilized, and capital market confidence recovered slightly
In Japan, the yen-dollar exchange rate rose 8% in a month, which directly affected the yen carry trade. Many investors in the market borrowed yen at ultra-low interest rates and then invested in high-yield assets. On July 71, after the Bank of Japan raised interest rates for the first time since the end of the negative interest rate policy in March this year, arbitrage became more difficult, and quite a number of traders were forced to close their positions, causing violent market fluctuations. Yesterday, the Nikkei index plummeted 9%, and the Topix index triggered the circuit breaker mechanism twice, and market panic spread rapidly.
Japan reacted quickly. Finance Minister Shunichi Suzuki expressed strong concern about the stock market decline that day. The next day, he reiterated that he would do his utmost to manage the economy and finances, cooperate with the Bank of Japan, and calmly judge the current situation.
On the morning of the 6th local time, the Nikkei index rose across the board after opening, rising by more than 3,200 points at one point, surpassing the 2,677.54 points in October 1990, setting the largest increase in trading hours in history. Due to the large increase, the Osaka Stock Exchange was temporarily halted for 10 minutes starting at 8:45 local time on the 6th.
As for the U.S. stock market, after suffering a heavy blow yesterday, U.S. stock index futures continued to rise today, with Nasdaq futures up 2%, S&P 500 futures up 1.5%, and Dow futures up 1%.
After the U.S. and Japanese stock markets stabilized, it had a positive effect on the stabilization of the global capital market, and the crypto market also avoided a worse situation.
Funds enter the market after huge leverage liquidation
In the past 24 hours, the total liquidation of the entire network was $631 million, of which $376 million was for long orders and $255 million was for short orders. Whenever the market hits a recent high in open interest, the price of BTC falls sharply. After BTC recently broke through $70,000, the market contract holdings surged.
After the bloody cleansing that followed, the total open interest of Bitcoin futures contracts on the entire network has dropped to US$25.8 billion, a drop of more than 30%, and the funding rate has turned sharply negative. A large number of leveraged long positions have been closed, and the market trading volume has increased significantly, which may indicate that the stage of rapid market decline has ended again.
Jump Trading, which sold off a large number of assets, had a stablecoin position of 96% before 12:00 noon yesterday. In the afternoon of the same day, Jump transferred 26 million USDT to Binance, bringing its total deposited funds in 24 hours to 70 million US dollars.
Another address suspected to be Justin Sun has also transferred 210 million USDT to HTX in the past two days, and has withdrawn nearly 15,000 ETH from last night to now, worth about 36 million US dollars.
It is worth mentioning that the USDT OTC premium rose to 3.22% during yesterday's market crash, with a quotation of RMB 7.37, which also means that some funds in the market chose to enter the market to buy at the bottom.
In terms of stablecoin data, the data shows that the total market value of USDT has increased by about US$300 million in the past 7 days, which is not much overall, but it still maintains steady growth.
USDC, which represents U.S. capital, rebounded from a total market value of $32.9 billion to a high of $33.8 billion, an increase of nearly $1 billion in just a few days.
Future Market
BitMEX co-founder Arthur Hayes: Financial markets may experience a second shock, and the problem of over-leverage is about to emerge
Arthur Hayes, co-founder of BitMEX, tweeted that the first wave of shocks in the financial market has passed, and now the problem of over-leveraged investors in the traditional financial sector is waiting to emerge. The second wave of shocks is expected to begin soon, and he hinted that if a rescue is to occur, the market may need to undergo more adjustments before this Friday. The current respite is only temporary, and market volatility will continue.
Trader Eugene: Concerned about a deep economic recession, it is recommended that the priority now is to preserve assets
Trader Eugene Ng Ah Sio shared some of his long-term views on market operations on social media, including:
1. I am usually reluctant to actively go long when there is a lot of uncertainty and weakness in the market;
2. I have bought altcoins before, but I set a risk limit and stopped buying after Bitcoin fell below $60,000. I will not buy these altcoins again in the foreseeable future;
3. This decline is a combination of US election uncertainty + unwinding of yen carry trades. But I am most worried about a deep recession, as this usually triggers a deep stock market bear market, and crypto has never experienced such a situation. We don’t know how crypto will perform in this environment, but if the current PA is a signal, then people will lose a lot of money by imitating too quickly;
4. Despite the sharp decline in recent weeks, I still see a fair amount of complacency in the market. Bulls are buying in from the highs, thinking this is a black swan event and once everything settles down, crypto will rise in a V shape. It is possible, but the longer we spend here, the more uneasy these players will get;
5. As always, I recommend capital preservation as a top priority in this situation. But since early August, market participants have largely been playing the game at Legendary difficulty.
summary
Although the market has stabilized, the full recovery of confidence still requires a positive macroeconomic situation and the final determination of the extent of the Fed's interest rate cut. In the absence of new stories and new narratives in the crypto market itself, if there are "useful" projects that are eye-catching and truly stand out, it will attract more capital inflows.
