Author: 912212.eth Source: X, @1912212eth
The extent of the market crash is beyond most people's imagination. After losing $60,000 at 10 pm last night, BTC fell sharply to below $53,000, with a minimum of $52,300. The 24-hour drop exceeded 10% and hit a new low for BTC since March this year. BTC has now stabilized above $54,000.
After falling below $3,000, ETH fell to $2,111, a 24-hour drop of more than 20%. It has now stabilized above $2,300. This price has almost wiped out all the gains in ETH this year. Altcoin generally fell by around 20%.
According to Coinglass data, the total liquidation of the entire network was $808 million in 24 hours, of which long orders were $705 million. The decline of US crypto stocks in the night market widened, with CleanSpark falling more than 20%, MicroStrategy and Marathon Digital falling more than 16%, and Coinbase and Riot Platforms falling more than 13%.
After BTC broke through $70,000 at the end of July, it failed to set a new record high. With funds sluggish, what factors accelerated the plunge in the crypto market?
Non-farm data raises concerns about US recession
Last Friday, the non-farm payrolls data released by the United States was unexpectedly lower than expected, triggering a series of chain reactions on Wall Street. The weak performance of this key economic indicator not only caused a sharp drop in US stocks, but also triggered widespread market concerns about the outlook for the US economy. As an important indicator of the health of the US economy, the unexpected performance of the non-farm data has caused shocks in the financial market. The US unemployment rate has soared by 0.6% from its low point this year. After months of continuous unexpected surges in the unemployment rate, the "Sam's Rule" that predicts recessions based on the unemployment rate has finally been triggered.
The rule states that when the three-month moving average of the U.S. unemployment rate rises by more than 0.5 percentage points relative to the lowest point in the past 12 months, a recession may begin. This rule has been 100% accurate since the 1970s. After the release of the unemployment rate data in July, the 0.5% threshold has been reached, which means that the United States may have entered a recession. From 1950 to date, among the 11 signals sent by the Sam recession indicator, only the recession in 1960 occurred 5 months later. The United States was already in recession when the remaining 10 signals appeared.
Jan Hatzius, chief economist at Goldman Sachs, raised the probability of a U.S. recession in the next year from 15% to 25% in a report. Goldman Sachs expects the Fed to cut interest rates by 25 basis points in September, November and December. In addition, Goldman Sachs said that if its forecast is wrong and the August employment report is as weak as July, a 50 basis point rate cut in September is likely. In contrast, JPMorgan Chase and Citi have adjusted their forecasts and expect the Fed to cut interest rates by 50 basis points in September.
Users in the market who believe in the recession story will choose to sell their assets because they are unwilling to bet on whether a recession will actually happen. The crypto market will be negatively affected after funds are withdrawn.
Global stock markets plunged in panic
The day after the Fed's interest rate meeting, the U.S. stock market began to plummet. The most direct cause was the July ISM manufacturing data released on August 1, which was only 46.8%, lower than the market's previous expectations. The index reflects the factory activity in the United States and is generally considered to be a signal of economic recession.
Subsequently, the non-farm payrolls data released on Friday continued to increase investors' concerns. The July data showed that the US unemployment rate rose to 4.3%, the highest level since 2021. Combined with the number of first-time unemployment claims released the day before, which hit the highest level since August 2023, it showed that the US job market began to show obvious signs of slowing down. US stock futures fell collectively, with Nasdaq 100 futures down 2.21% and S&P 500 futures down 1.23%.
Today, Asian markets were also affected by the US stock market and began to fall. The Japanese stock market fell sharply, with the Nikkei 225 index falling 6%, and the cumulative decline in three days exceeded 12%. The decline of the Topix Index triggered the circuit breaker mechanism, and it fell 20% from its high in July, and is bound to enter a technical bear market. Banking, financial and mining stocks led the decline. The Korean KOSPI index fell by 5%, and Samsung's stock price fell by 6%, the largest drop since 2020. The Singapore Straits Times Index fell by 3%, the Australian S&P 200 Index fell by 3%, and the Philippine stock index fell by 2%.
Large liquidations in crypto markets accelerate decline
On June 20, there were rumors that Jump Trading was being investigated by the U.S. Commodity Futures Trading Commission (CFTC). Just four days later, Jump Crypto President Kanav Kariya announced on his social media platform that he would resign today, without clearly mentioning the reason for his resignation. Recently, Jump Trading redeemed a sum of $410 million worth of wstETH (120,000) in batches into ETH and then transferred it to trading platforms such as Binance/OKX. In the past 24 hours, Jump Trading has transferred another 17,576 ETH (about $46.78 million) to CEX. According to Scopescan monitoring, Jump's positions are currently dominated by USDC and USDT.
Arthur Hayes, co-founder of BitMEX, just posted on social media that he learned through traditional financial sources that a "big guy" had collapsed and sold all his crypto assets. This so-called "big guy" is most likely Jump Trading.
In addition, after the market price continued to fall due to severe selling pressure, there were multiple large liquidations and on-chain liquidation events today. In the morning, four whales were forced to liquidate a total of 14,653 ETH, worth approximately $33.54 million, due to the rapid decline in the market. According to Parsec data, the lending liquidation volume on DeFi exceeded $320 million in the past 24 hours, setting a new high for the year.
Centralized exchanges also experienced large liquidations. A Binance user had his long order liquidated for $10.9074 million at 10:17 am today when the Ethereum price was $2,197. The contract trading pair was ETH/USDC.
As the market continued to liquidate leverage, it also increased selling pressure, causing the crypto market to fall sharply.
