There’s way too much blood on Satoshi Street right now. The crypto market just crashed a staggering 12.87%, wiping out over $300 billion in mere hours. This broad weekend selloff in crypto accelerated during Sunday evening U.S. hours, sending Bitcoin (BTC) plunging to levels not seen since February and Ether (ETH) back to prices not seen since December. Bitcoin is down 12% over the past 24 hours and 20% over the past week. Ether has taken an even bigger hit, down 21% over the past 24 hours and 30% for the week, wiping out its year-to-date gains.
Crypto Market Liquidations Soar to $800M
Data from Coinglass shows that the past 24 hours saw over $800 million liquidated from the crypto market, with most of it happening in the last 4 hours. Out of this, $700 million was in long liquidations, while $106 million was in short liquidations.
Bitcoin’s price took a nosedive, dropping over 10% to slip below $54,500. The altcoins are suffering even more, with Ethereum down by 20% and other top altcoins falling between 15-20%. The broader CoinDesk 20 Index is down 12% over the past 24 hours.
The Trigger: Bank of Japan’s Rate Hike
The massive correction in crypto and traditional markets might have been triggered by the Bank of Japan, which last week hiked its benchmark interest rate. This monetary tightening sent the yen shooting higher and Japan’s Nikkei stock index tumbling. The Nikkei dropped another 6% early Monday, now down roughly 15% over the past three sessions and 20% from its mid-July peak.
The action in Japan spread to the U.S., where the Nasdaq slid more than 5% in the final two sessions last week. Nasdaq futures were down 2.5% in Sunday evening trading.
Fed’s Ambivalence Adds to Market Jitters
In addition to the Bank of Japan’s unexpected hawkish move, the U.S. Federal Reserve also surprised some by appearing ambivalent about cutting rates in September, despite holding rates steady last week. Traders have now priced in a 100% chance of lower U.S. base rates in September, with a 71% chance of a 50 basis point cut and a 29% chance of a 25 basis point move.
US Recession Looming?
Fears of a US recession are ramping up, with the chances of a hard landing increasing significantly. Economist Peter Schiff didn’t hold back, saying, “Central banks have played with fire for years. Now the world is about to be burned. They kept interest rates artificially low, blowing up a global debt bubble. But as inflation reared its head, rising rates pricked that bubble. Now it’s time to pay the piper. The game is over.”
With the tech market getting hammered and global conditions looking shaky, US stock index futures also tanked significantly during Monday’s correction. On top of that, rising tensions between Iran and Israel are making things even worse. The crypto market is definitely going to feel the impact of these risk-averse moves going forward.