Cryptocurrency Market Crash Wipes $500 Billion
05 Aug, 2024 ● Crypto News
The crypto market has experienced its most significant three-day sell-off in nearly a year, losing up to $510 billion in total market capitalization since August 2.
This sharp decline in the crypto market coincided with a drop in equities, with the S&P 500 falling by as much as 4.4% during the same period.
The market downturn was driven by weak employment data, slowed growth among major tech stocks, and renewed recession fears.
Several major companies, including Microsoft and Intel, reported lower-than-expected second-quarter results.
Market leader Nvidia also suffered due to expectations of impending rate cuts in September, leading capital to flow back into smaller, lagging companies.
The last time the crypto market experienced such a sharp three-day decline was in mid-August 2023.
Bitcoin and Ether prices also dropped significantly during a sudden market sell-off on August 5, with the assets falling by 10% and 18%, respectively, at the time of publication.
BTC and ETH have declined by 20% and 28%, respectively, over the past seven days.
Solana has been the hardest-hit cryptocurrency among the top 10 largest tokens by market cap, falling by 30.6% since July 30.
Mena Theodorou, the co-founder of Australian crypto exchange Coinstash, told Cointelegraph that macroeconomic factors significantly influenced the recent sell-off.
“The broader sell-off of at-risk assets across capital markets was triggered by the Japanese central bank raising interest rates, as well as increased tensions in the Middle East,” Theodorou said, adding:
“In this situation, as arguably the catalyst was due to an interest rate hike in Japan, Asian sentiments are as bearish as those of the United States. This can, in turn, create a cascading effect on the already downward-trending momentum of crypto price movements.”
“There are also other crypto-specific reasons at play — namely the redemption of Bitcoin holdings by Mt Gox creditors, coupled with rumors of the US Government moving its own Bitcoin holdings,” he further commented.
Several market commentators have also pointed to a spate of selling from Jump Crypto as an aggravating factor.
According to Arkham Intelligence data, the trading firm has offloaded hundreds of millions of dollars in assets in recent days.
The Crypto Fear & Greed Index — an indicator that tracks market sentiment toward Bitcoin and crypto — has fallen back into “fear” and currently displays a score of 26, according to Alternative.me.
Looking ahead, the crypto market faces another challenging week. The weekend’s losses need to be offset by an increase in spot and derivatives activity from traditional financial institutions.
“Bitcoin has entered the CME Gap, but technically, it can only be filled during TradFi trading hours,” Keith Alan, co-founder of trading resource Material Indicators, wrote in his latest X post on August 4.
Sources:
https://cointelegraph.com/news/crypto-crash-300-billion-largest-three-day-plunge-crypto-one-year
https://x.com/EmberCN/status/1819912925060198753
https://platform.arkhamintelligence.com/explorer/entity/jump-trading
https://alternative.me/crypto/fear-and-greed-index/#google_vignette
