Featured image created with DALL.E, chart from TradingView.com<\/div>\n","protected":false},"excerpt":{"rendered":"
Over the past 24 hours, the crypto market has witnessed a severe downturn, with Bitcoin’s price tumbling down 15% to a low of $49,000 on Binance (BTC\/USDT), marking a significant departure from its $70,000 high last week\u2014a 26% crash. Similarly, Ethereum (ETH) plunged 39% from $3,400 to $2,100. This downward trend was not isolated but echoed across the altcoin spectrum, which experienced even steeper declines. #1 Recession Fears Cause Bitcoin Crash The initial spark for the current market volatility appears to stem from intensifying fears of a US recession, triggered by unexpectedly weak US job market data on Friday. The July report showed a gain of only 114,000 jobs\u2014significantly below the Wall Street prediction of 175,000. This was the weakest job growth since December of the previous year and nearly the lowest since the start of the COVID-19 pandemic in March 2020. Charles Edwards of Capriole Investments remarked via X, \u201cEvery single time the unemployment rate turns up as it has today, we have a recession. Just as the Fed was too slow to tighten in 2021, it looks like they were too slow to ease in 2024.\u201d Further compounding the market’s nervousness was the revelation that Warren Buffett’s Berkshire Hathaway sold about 50% of its Apple holdings. This sell-off by one of the world\u2019s most watched investors was interpreted as a move to hedge against potential market downturns, considering Berkshire Hathaway disclosed holding a record $277 billion in cash in its Q2 report. Related Reading: Bitcoin Triple Threat: Analyst Identifies Three Signals For BTC Price Rebound Additionally, the Bank of Japan\u2019s decision to raise its key interest rate to about 0.25% from a range of zero to about 0.1% has had significant implications. This rate hike, the second since 2007, sent shockwaves through the financial sectors globally. Historically, rate hikes by the Japanese central bank have been precursors to global recessions. Following the announcement, the Nikkei experienced its largest 2-day drop in history, surpassing even the declines seen on Black Monday in 1987. Nick Timiraos, often referred to as the \u201cFed\u2019s mouthpiece\u201d and a reporter for the Wall Street Journal, revealed, \u201cGoldman Sachs says there are good reasons to think the rising unemployment rate in the weak-across-the-board July payroll report is less fearsome than normal…But raises its recession-probability-tracking odds to 25% from 15%.” Goldman Sachs also adjusted its expectations for the Federal Reserve’s policy response, anticipating rate cuts at each upcoming meeting, with a possibility of a more aggressive 50 basis point cut if the August employment report mirrors July\u2019s weakness. #2 Yen Carry Trade Unwind Further exacerbating the market’s fall was a significant movement in the forex markets, particularly with the Japanese yen. After the Bank of Japan raised its key interest rate, the yen strengthened considerably against the US dollar. This move pressured traders who had engaged in the \u201cyen carry trade\u201d, borrowing yen at low rates to purchase higher-yielding US assets. Related Reading: Trump Floats Bitcoin Payments As Solution To $35 Trillion US Debt Crisis Adam Khoo noted, “The sharp rise in the JPY\/USD is causing a massive unwind of yen carry trade positions and contributing to the sharp decline in US stocks.” The reversal of these trades has probably not only impacted the forex and stock markets but also had a cascading effect on Bitcoin and crypto as assets are liquidated to cover losses and repay yen-denominated liabilities. BitMEX founder Arthur Hayes commented via X, \u201cMy TradFi birdies are telling me somebody big got smoked, and is dumping all #crypto. No idea if this is true, I won’t name names, but let the fam know if you are hearing the same?????\u201d #3 Jump Trading And Large Sellers There were unusual sell orders recorded across major exchanges such as Kraken, Gemini, and Coinbase, predominantly on a Sunday, which is typically a quieter trading day. This suggests orchestrated actions by large players, potentially involving the unwinding of positions by firms like Jump Trading. Jump Trading has reportedly been involved in substantial unloading of Ethereum, amounting to about $500 million worth over the past two weeks. Market rumors suggest that the company\u2019s sell-off could be a strategic exit from its crypto market-making ventures or an urgent need for liquidity. Ran Neuner commented via X: \u201cI’m watching this selling by Jump Trading […] They are the smartest traders in world, why are they selling so fast on a Sunday with low liquidity? I would imagine they are being liquidated or have an urgent obligation.\u201d Dr. Julian Hosp, CEO of the Cake Group, suggested on X: \u201cThe reason for the crazy crypto sell off seems to be Jump Trading, who are either getting margin called in the traditional markets and need liquidity over the weekend, or they are exiting the crypto business due to regulatory reasons (Terra Luna related). The sell-off is relentless atm.\u201d Furthermore, Mike Alfred highlighted the possibility of distress within the market, suggesting that a large Japanese fund might have collapsed, holding substantial amounts of Bitcoin and Ethereum. \u201cA big Japanese fund blew up. Unfortunately, it was holding some Bitcoin and Ethereum. Jump and other market makers sensed the distress and exacerbated the move. That\u2019s it. Game over. On to the next one,\u201d Alfred stated. #4 Liquidation Cascade Exacerbates Bitcoin Price Crash The market witnessed a dramatic increase in liquidations, with CoinGlass reporting that 277,937 traders were liquidated in the last 24 hours, leading to total crypto liquidations of approximately $1.06 billion. The largest single liquidation order, valued at $27 million, occurred on Huobi for a BTC-USD position. In total, $302.07 in Bitcoin longs were liquidated in the last 24 hours, according to CoinGlass data. These forced liquidations, driven by margin calls and stop-loss orders, have amplified the downward pressure on cryptocurrency prices, pushing them further into the red. #5 Trump Momentum Fades Another less significant factor may involve the shifting political landscape, as Kamala Harris gains according to Polymarkets against Donald Trump (Harris 43% vs. Trump 55%). This shift is perceived negatively by the Bitcoin and crypto market. The entire market is favoring a Trump win. He wants to build a \u201cstrategic Bitcoin stockpile\u201d and over the weekend said BTC could be used to pay off the US debt of $35 trillion. #6 Mt. Gox Distributions Still Affecting Market Liquidity Finally, the ongoing distribution of Bitcoins from the defunct Mt. Gox exchange continues to influence the market. As former users of the exchange receive and potentially sell their returned Bitcoins, this has added to the selling pressure on the market, further depressing prices. At press time, BTC bounced off the support and recovered to $52,909. Featured image created with DALL.E, chart from TradingView.com<\/p>\n","protected":false},"author":571,"featured_media":633125,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5651],"tags":[428,506,656,679,90843,1119,91854,91855],"class_list":["post-633098","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bitcoin","tag-bitcoin","tag-bitcoin-crash","tag-bitcoin-news","tag-bitcoin-price","tag-bitcoin-price-crash","tag-btc","tag-why-is-bitcoin-down-today","tag-why-is-bitcoin-price-down-today"],"acf":[],"yoast_head":"\n
Bitcoin Price Crashes To $49,000: Key Reasons Explained<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n