Today, Bitcoin dropped below $61,000, causing over $260 million in long liquidations. Here's why BTC is experiencing a selloff:
1) Rising Unemployment Rate
- Unemployment Spike: The US unemployment rate unexpectedly rose to 4.3%.
- Economic Concerns: Higher unemployment signals potential recession, triggering a stock market crash that also impacted crypto.
2) Japanese Yen Strengthening
- BOJ Rate Hike: The Bank of Japan raised interest rates for the first time in 17 years.
- Investor Reaction: Investors are pulling money out of US equities and other risk-on assets.
- Borrowing Costs: Previously, it was cost-free to borrow yen; now, rising costs are shifting investment strategies.
3) WWIII Fear
- Geopolitical Tensions: For the fifth time in 2024, fears of World War III have spiked.
- Flight to Safety: Uncertain times lead investors to avoid risk-on assets, contributing to the Bitcoin dump.
4) Mt. Gox and Genesis Distribution
- BTC Distribution: The distribution of Bitcoin from Mt. Gox is nearing its end, with Genesis distribution now starting.
- Market Impact: Yesterday, over $1 billion worth of BTC was sent, causing market fears of an impending dump.
The Fed's Potential Response
- Rate Cuts: These events might push the Fed to act faster, potentially leading to rate cuts.
- Market Rebound: Once fear subsides, the market could rebound, triggering a parabolic run. 🔥
Conclusion
While the current selloff is driven by a combination of economic indicators, geopolitical tensions, and significant Bitcoin distributions, the market may rebound strongly once these fears diminish.
