The cryptocurrency market has just experienced its worst three-day sell-off in nearly a year, with its total market value shrinking by $510 billion since August 2. On August 5, 2024, the price of Bitcoin fell sharply, falling below $50,000. Against the backdrop of a global market crash, the decline in the past 24 hours was as high as 20%, and the entire crypto market fell by nearly 16%. According to real-time data, the total liquidation in the past 24 hours has reached $1.03 billion, of which $894.03 million is long positions, and the market is generally in a downturn.
As for the specific reasons for the cryptocurrency "crash", there are many different opinions in the market, which can be summarized into several factors: First, the war between Israel and Iran in the Middle East seems to be about to break out! According to three people familiar with the matter, US Secretary of State Antony Blinken warned allies of the Group of Seven on August 4 that Iran and Hezbollah may launch a large-scale air strike on Israel as early as August 5.
The United States does not know the exact time of the airstrike, but stressed that it could begin as early as the next 24 to 48 hours. Blinken stressed that the United States is worried about retaliation from Iran and Hezbollah, and is using diplomatic means to prevent the escalation of the conflict and limit attacks from both sides.
Iran's airstrikes were mainly in retaliation for Israel's assassination of Hamas political leader Ismail Haniyeh in Iran at the end of July. Iran accused Israel of firing short-range missiles at Haniyeh's residence in Tehran, killing Haniyeh, who played a key role in the Gaza ceasefire agreement. Israel has not yet confirmed or denied this.
It is estimated that the method of this attack may be the same as the air strike on April 13 this year, but the scale may be larger, and this time Hezbollah in Lebanon may also join the air strikes on Israel in further retaliation for Israel's assassination of Hezbollah military commander Muhsin/Fuad Shukr in the Lebanese capital Beirut at the end of July.
Israel has previously acknowledged that Shukur died in its airstrike. On Sunday, Hezbollah launched dozens of rockets into northern Israel in retaliation. The governments of the United States, Britain and other countries have called on citizens to leave Lebanon as soon as possible before civil aviation flights are grounded. U.S. and Israeli officials are still unclear whether Iran and Hezbollah will coordinate the attack or attack separately. They believe that Iran and Hezbollah are still trying to finalize the revenge plan and are waiting for approval from the top political leaders.
Seeing that Iran and Hezbollah will launch air strikes on Israel, coupled with the rising anti-Israel sentiment in the Middle East, the risk of expanding into a regional war in the Middle East has risen. The United States has urgently strengthened its military deployment in the Middle East and sent more warships and fighter jets to the region. Michael Kurilla, commander of the US Central Command, arrived in the Middle East on the 3rd and is expected to visit Jordan and Israel. Kurilla plans to mobilize international and regional allies to jointly defend Israel, especially Jordan, which intercepted Iranian drones in an air strike in April.
There are concerns that this airstrike will be larger and more complex. Iran and Hezbollah have indicated that the response, no matter what form it takes, needs to be stronger than the attack in April, and they will make a series of actions on the battlefield. Regarding the upcoming airstrike, Israeli Prime Minister Benjamin Netanyahu said that if there is evidence of an Iranian attack, he will consider a preemptive strike to deter Iran.
Secondly, affected by the conflict in the Middle East, Asian stock markets continued the global stock market decline on Friday in early trading on August 5, with Japanese stocks suffering the worst decline. The Nikkei 225 index hit a record low, and the Topix index plunged by more than 10% in early trading. The Topix and Japanese government bond futures triggered the circuit breaker mechanism (also known as the automatic suspension mechanism, which means that when the stock market index touches the upper and lower limits of the pre-set range, the exchange will automatically suspend trading for a period of time in the hope that the market will calm down and avoid the spread of panic).
The Nikkei 225 and Topix index once plunged 20% from their historical highs in July. If they close at this level today, it means that Japanese stocks are in a "technical bear market." The two major Japanese stock indices have fallen for the third consecutive trading day, marking the worst decline since the 311 earthquake in 2011.
This trend was also driven by the market's hawkish signal that the Bank of Japan raised interest rates last week and may raise interest rates further. In addition, foreign investors' concerns about the slowdown in the US economy and the appreciation of the yen also contributed to this wave of decline. The Korean stock market fell by more than 5% in early trading today, triggering the sidecar mechanism and suspending sell orders. The cryptocurrency market may also be dragged down by this, and fell across the board this morning, carrying out a "massacre".
Finally, Arthur Hayes, founder of the BitMEX exchange, revealed that he learned from sources in the traditional financial circle that a big name in the cryptocurrency circle had fallen and was selling all his cryptocurrencies. In this regard, the community generally speculated that this big name was the cryptocurrency department of Jump Trading, a Wall Street trading giant, and Jump Crypto, a well-known market maker in the cryptocurrency circle.
As for the reason, one of them is that on-chain data analyst Yu Jin once tweeted that Jump Trading is currently redeeming a sum of $410 million worth of wstETH into ETH in batches, and then transferring it to exchanges such as Binance and OKX, indicating that they may be selling a large amount of Ethereum: As of now, they have unpacked and redeemed 83,000 wstETH into 97,500 ETH in the 9 days since July 25, of which 66,000 ETH have entered the exchange.
On the other hand, as early as June 20, the U.S. Commodity Futures Trading Commission (CFTC) was investigating Jump Crypto's cryptocurrency business, including its trading and investment activities. The community also speculated whether Jump Trading is currently facing severe regulatory compliance issues. However, neither Jump Trading nor Jump Crypto has made any explanation for this, and the specific reasons remain to be observed.
In general, the current cryptocurrency market is experiencing an unprecedented "winter". From Iran's impending attack on Israel to the circuit breakers of the Japanese and Korean stock markets, to the potential downfall of the big names in the cryptocurrency circle, a series of events have led to a sharp drop in cryptocurrencies.
It is also worth mentioning that this round of cryptocurrency crash is highly similar to the "cryptocurrency winter" in 2021. At that time, Bitcoin fell from $69,000 to $33,000, and Ethereum also plummeted from $48,000 to $21,000, and the entire cryptocurrency market evaporated more than $2 trillion. In this round of crash, Bitcoin has plummeted from $69,000 to around $50,000, and Ethereum has also fallen from $48,000 to $22,000.
Industry insiders predict that as the global macroeconomic environment continues to deteriorate, such as rising inflation, interest rate hikes and escalating geopolitical conflicts, cryptocurrency prices may fall further.
