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The cryptocurrency market experienced a dramatic selloff over the weekend, with a notable decline extending into Monday. Bitcoin and ether led the downturn, resulting in a loss of approximately $367 billion in total market value, according to CoinGecko. The market partially recovered later in the day.
Key Cryptocurrency Movements:
- Bitcoin: The price of bitcoin dropped by 15% in the past 24 hours, briefly falling below the $50,000 mark to $49,111.10. It is currently trading just below $51,000. Despite the recent plunge, bitcoin is still up nearly 17% year-to-date.
- Ether: Ether experienced a 22% decline, falling to around $2,200 and erasing its annual gains. Other notable cryptocurrencies, including Binance’s BNB token and Solana, also saw significant drops of 20% and 22%, respectively.
Market Context and Impact:
- The cryptocurrency selloff aligned with a broader slide in global equity markets. In Asia-Pacific, Japan’s Nikkei 225 fell over 12% following the Bank of Japan’s decision to raise its benchmark interest rate to its highest level in 16 years. This marked the worst day for the Nikkei since the “Black Monday” crash in 1987.
- In the U.S., the Nasdaq Composite slid 3.4% last week, marking its worst three-week stretch since September 2022. Disappointing earnings reports, a weaker-than-expected jobs report, higher unemployment, and a declining manufacturing sector contributed to the market’s woes.
The U.S. Federal Reserve’s decision to hold the benchmark rate steady, without promising a rate cut in September, also impacted market sentiment. Lower interest rates are generally favorable for risky assets, such as cryptocurrencies.
Derivatives Market Impact:
- The crypto market’s decline resulted in over $1.13 billion in liquidations in the derivatives markets, according to Coinglass.
Broader Implications:
- The recent downturn is notable as the SEC approved new spot exchange-traded funds (ETFs) for bitcoin and ether earlier this year. These ETFs have attracted significant investment, and the recent selloff will impact a broad range of investors.
- Additionally, Morgan Stanley plans to allow its 15,000 financial advisors to pitch bitcoin ETFs to clients, marking a significant move by Wall Street into the cryptocurrency space.
Investors are also awaiting new trade data from China and Taiwan, as well as central bank decisions from India and Australia, which could influence future market movements.