The crypto market is down today due to a combination of factors:
1. Yen-Dollar Carry Trade Disruption: The Bank of Japan’s recent interest rate hike has made yen borrowing more expensive, disrupting the yen-dollar carry trade. Traders are closing positions in riskier assets like cryptocurrencies to avoid higher borrowing costs, contributing to a market sell-off .
2. Large-Scale Liquidations: Over $1 billion in long positions have been liquidated in the last 24 hours. This mass liquidation has caused a cascading effect, driving prices further down as traders close their leveraged positions .
3. Spot Bitcoin ETF Launch: The recent launch of spot Bitcoin ETFs in the US led to a sell-off rather than the expected price boost. Investors cashed out heavily from products like Grayscale’s GBTC, adding to the downward pressure on Bitcoin and other cryptocurrencies .
4. Bearish Sentiment: The overall market sentiment has turned bearish, with many traders stepping back and closing their positions. This is reflected in the negative funding rates for major cryptocurrencies like Bitcoin and Solana .
These factors, combined with ongoing geopolitical tensions and economic uncertainties, have led to the significant drop in the crypto market today.
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