Crypto Market Plummets: Bitcoin and Ethereum Hit Multi-Month Lows Amid Global Selloff

In a shocking turn of events, the cryptocurrency market experienced a severe correction over the weekend, with Bitcoin (BTC) and Ethereum (ETH) leading the downward spiral. The selloff, which accelerated during Sunday evening US hours, has sent shockwaves through the digital asset space and beyond.

Bitcoin Plunges to February Lows

Bitcoin, the world’s largest cryptocurrency by market capitalization, saw its value plummet to levels not seen since February. The digital gold dropped below $54,000 at one point, before slightly recovering to trade at $54,698. This represents a staggering 12% decrease in the past 24 hours and a 20% decline week-over-week.

Ethereum Erases 2024 Gains

Ethereum, the second-largest cryptocurrency, fared even worse. ETH fell to its lowest level since December, losing 21% in the past 24 hours and 30% over the past week. This dramatic decline has effectively erased all of Ethereum’s gains for 2024, with the token now trading below $2,400.

Broader Crypto Market Affected

The selloff wasn’t limited to the top two cryptocurrencies. The entire crypto market experienced a significant downturn:

– BNB dropped 12.88%
– XRP fell 13.38%
– The overall crypto market declined by 10% in the past day

Factors Behind the Crash

Several factors have contributed to this market-wide correction:

1. Bank of Japan’s Interest Rate Hike: The unexpected rate hike by the Bank of Japan sent the yen soaring and triggered a selloff in the Japanese stock market, with effects rippling through global markets.

2. US Federal Reserve Uncertainty: The Fed’s ambivalence about potential September rate cuts has surprised investors, adding to market uncertainty.

3. Weak US Jobs Data: Lower-than-expected payroll numbers have heightened recession fears, impacting both crypto and traditional markets.

4. Jump Crypto Asset Movements: The crypto arm of Jump Trading appeared to move hundreds of millions of dollars worth of crypto assets, sparking liquidation speculations.

5. US Election Uncertainty: Growing approval for Vice President Kamala Harris in the upcoming presidential race has introduced new uncertainty for crypto investors.

Market Reactions and Liquidations

The sudden price drop led to a wave of liquidations across the crypto market:

• Over $740 million in leverage positions were wiped out in 24 hours
• Ethereum traders were hit hardest, with over $256 million in ETH longs liquidated
• Bitcoin longs saw $231 million in forced closures

Expert Opinions

Market experts have weighed in on the situation:

• Justin d’Anethan of Keyrock noted that this market downturn appears to be ETH-led rather than BTC-led.
• Jeff Dorman of Arca suggested that increased support for Kamala Harris could be “bad for crypto.”
• Rich Rosenblum of GSR sees potential for a “home run opportunity to buy” if macro conditions worsen further.