Bitcoin Price Crashes To $49,000: Key Reasons Explained
2024年8月5日 - 5:40PM
NEWSBTC
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—a 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—significantly 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, “Every 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.” 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’s 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’s
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 “Fed’s mouthpiece” and a
reporter for the Wall Street Journal, revealed, “Goldman 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’s 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 “yen carry trade”,
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, “My
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?????” #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’s
sell-off could be a strategic exit from its crypto market-making
ventures or an urgent need for liquidity. Ran Neuner commented via
X: “I’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.” Dr. Julian Hosp, CEO of the Cake Group,
suggested on X: “The 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.” 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. “A 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’s it. Game over. On to the next one,” 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 “strategic Bitcoin stockpile” 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
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