This is the definition of a crypto crash. I don’t remember seeing Ethereum more than 20% down in a day since the last bear market. Bitcoin is down 13% and is now trading below $53k. Ethereum price is below $2.4k.
All other altcoins are bleeding more than 15% as well. So, what actually happened?
The best summary of events we found was the one by Layergg analyst.
Market Turbulence: A Perfect Storm
The crypto market witnessed $370 million in liquidations. This massive selloff occurred between 2am and 3am CET, sending shockwaves through the entire crypto ecosystem.
Meanwhile, the traditional markets aren’t faring much better. The Nikkei experienced its biggest 2-day drop in history, surpassing even the infamous Black Monday. This level of volatility in the stock market is undoubtedly contributing to the overall financial uncertainty.
What happened in Crypto in the last 12h:• $370 million liquidated from the crypto market in the past 1 hour.• Biggest 2-day drop for the Nikkei in history, surpassing Black Monday.• Jump Trading has likely been offloading $ETH, unstaking $500M worth over the past 2… pic.twitter.com/ppxYYq232U
— Layergg (@layerggofficial) August 5, 2024
Adding fuel to the fire, Jump Trading has reportedly been offloading Ethereum, unstaking $500 million worth over the past two weeks. Rumors are swirling that they might be exiting the crypto market maker business altogether, which could have significant implications for market liquidity.
Geopolitical and Economic Factors
The geopolitical landscape is also playing a role in the market downturn. According to Axios, the US has tipped off the G-7 that Iran might strike Israel within the next 24 hours. Such potential conflicts always create uncertainty in financial markets.
In the world of traditional finance, Berkshire Hathaway has been dumping more shares this quarter than ever before. Many market analysts are interpreting this as a major red flag, potentially signaling an impending recession.
Political shifts are also influencing market sentiment. Trump’s momentum in the polls has reportedly flipped to Kamala Harris. Polymarket shows Trump at 52% and Harris at 45%, with the gap closing in. These political uncertainties can have ripple effects across various market especially considering Trump being pro-crypto during this campaign.
Read also: Solana Surges Past Key Resistance, Analyst Spots SOL Buying Opportunity
The unwinding of Yen carry trades is causing a reduction in global liquidity, affecting asset prices across markets, including US Treasuries and cryptocurrencies. This interconnectedness of global finance demonstrates how events in one sector can quickly impact others.
Lastly, Korean financial authorities are investigating possible price manipulation in AVAIL during its Bithumb listing. This could potentially lead to fewer listings on Korean exchanges for a while, affecting the broader crypto ecosystem.
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