Bitcoin plummet over 16% over carry trade
Bitcoin and Ether experience a significant decline in value. Ever since the collapse of FTX, Cryptocurrencies experienced significant volatility in global markets on Monday, with Bitcoin plummeting over 16% and Ether suffering its largest decline since the FTX collapse in 2022.
Cryptocurrencies experienced significant losses as global markets turned risk-averse on Monday. Bitcoin plummeted by over 16%, while Ether, the second-ranked cryptocurrency, suffered its sharpest decline since the collapse of FTX in 2022.
Best token Bitcoin experienced a 9% decline, reaching $53,883 by 4:51 p.m. in New York. This drop follows a 13.1% decrease last week, which marked the largest decline since the FTX exchange incident. Ether experienced a significant drop in value, losing over a fifth of its worth before recovering slightly to trade at $2,419. Many of the top cryptocurrencies experienced declines.
Shares in cryptocurrency-related companies took a nosedive. Coinbase Global Inc., the largest US exchange, experienced a 7.3% decline. Bitcoin proxy MicroStrategy Inc. also saw a significant drop of almost 10%. Meanwhile, miners Marathon Digital Holdings Inc. and Riot Platforms Inc. continued their downward trend for a sixth consecutive trading session.
The declines are a result of a global stock selloff that has intensified, reflecting concerns about the economic outlook and doubts about whether heavy investment into artificial intelligence will meet the high expectations surrounding the technology. Geopolitical tensions in the Middle East are on the rise, which is causing some unease among investors.
The total liquidations in bets on crypto reached approximately $1.1 billion in the past 24 hours, marking one of the largest figures since early March this year. Coinglass data reveals that bullish positions accounted for $814 million, while short positions amounted to $263 million.
On August 2nd, there was a significant decrease in the amount of money invested in US exchange-traded funds for Bitcoin, marking the largest outflows in approximately three months. One question is whether the products will attract buyers when they resume trading, or experience a more significant outflow.
In the week ending on August 3rd, data from CoinShares Ltd. reveals that there were outflows of $400 million and $146 million from Bitcoin and Ether investment products, respectively.
Digital assets have been affected by the unwinding yen carry trade, as speculators adapt to the increased interest rates in Japan, as stated by Hayden Hughes, the head of crypto investments at family office Evergreen Growth.
According to Hughes, investors are currently grappling with a significant rise in hedging costs due to the volatility in the trading pair of the US dollar and Japanese yen.
Bitcoin has experienced various influences since reaching an all-time high of $73,798 in March. That includes the current political situation in the US, as Republican Donald Trump and Democratic opponent Vice President Kamala Harris, who has not yet outlined her stance on digital assets, engage in a heated battle for the presidency.
Additionally, there is the concern of potential sales of Bitcoin confiscated by governments and the possibility of an excess supply of tokens being returned to creditors via bankruptcy proceedings, which could impact the market.
Bond traders are increasingly betting on US interest-rate cuts starting in September to help boost economic growth. According to Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors LLC, the potential for a more lenient monetary policy is actually beneficial for the cryptocurrency market.
The Bitcoin decline reached its lowest point on Monday, bringing the token back to levels not seen since February. On the other hand, Ether experienced a decline and returned to price levels that were observed earlier in the year. Just like Bitcoin, it remains uncertain how investors will respond to the introduction of new US spot-Ether ETFs.
According to Justin D’Anethan, the head of Asia-Pacific business development at market maker Keyrock, the recent decline in cryptocurrency prices seems to be influenced by Ether. He mentioned that there have been rumors on social media about institutions selling assets related to Ether.
According to Khushboo Khullar, a venture partner at Lightning Ventures, the recent decline in the stock market has led to a sense of panic among investors. This has resulted in a rush for liquidity as investors try to settle their margin calls. She claimed that the recent decline in cryptocurrency prices presents a great opportunity for investors to make purchases.
“Technical indicators, however, are currently indicating oversold conditions. Additionally, the Crypto fear and Greed index is flashing ‘Fear’, which typically suggests a potential price bottom,” commented Simon Peters, a crypto analyst at eToro. There is a potential for a rebound in the coming days, but the extent of the price increase remains uncertain.
Bitcoin’s year-to-date gain has slowed down to around 29%, while gold has risen by 17% and global stocks have seen an 8% increase.
