Today's market is really miserable. It is another memorable day. To be honest, today makes me feel like I am back to March 12. Although the absolute decline is much smaller than that time, it was from more than 10,000 US dollars to 3,800 US dollars, a drop of 64%, while this time the drop from 70,000 US dollars is less than 30%. So judging from the decline alone, the decline on March 12 was more severe. But you have to know that the market was still bullish last week, and it changed in just one weekend. The number of participants and funds in the bull and bear markets is very different. In fact, the damage to the market caused by this wave of decline is no less than that of March 12.
Although the losses in the past two days are serious, there are often more opportunities in desperate situations. This kind of super anniversary is usually event-driven and does not have the ability to reverse the trend. Once the event is over, the market will re-correct the price. Historically, whether it is the 94 incident, March 12, September 24 or May 19, these anniversaries did not end the bull market, and they were often accompanied by higher-level market conditions. After the 94 incident, the domestic ICO was cleared, and the market continued to rise dozens of times; after March 12, the super bull market in 2021 came; after September 24, the market continued to set new highs. The old leeks who have experienced these events should now be able to look at the August 5 crash calmly. I remember that during the bull market in 2021, many people in the community hoped that the market would have another March 12 crash, giving everyone a chance to get on board. So for long-term investors, isn't the August 5 crash an opportunity to get on board? It's just that some people dare to seize the opportunity, while some people's confidence is shattered. This is the charm of the volatile crypto market.
As for the reasons for this plunge, I think it is the result of a combination of events. The first reason is the risk of war. After Israel beheaded the top leaders of Hamas and Hezbollah in Lebanon, the risk of the Middle East war expanding has increased. US intelligence said that Iran will launch a large-scale attack on Israel on Monday, and Israeli President Netanyahu also warned that Iran is ready to fight back. According to historical practice, the military expenditures of these two parties may need to be partly allocated from the crypto.
The second reason is the US recession crisis. Non-farm payrolls on Friday were far below expectations, while the unemployment rate reached 4.3%. Some experts previously said that an unemployment rate of 4.1% was already an unacceptable figure for the government, so this 4.3% unemployment rate directly increased CME's expectations for a 50 basis point rate cut in September to 96%. Even now, many media have begun to predict that the Federal Reserve may make an emergency rate cut to save the market before the opening of the US stock market tonight. Don't think this is impossible. The United States has made emergency rate cuts several times in history, such as the Internet bubble in 2001, the financial crisis in 2008, and the new crown crisis in 2020. At most, the rate cuts were made several times in a row, and a single rate cut of 150 basis points has occurred. So if the Federal Reserve rescues the market tonight, the market is likely to reverse.
The third reason is that Trump's winning rate has been declining. Currently, Trump's winning rate on polymarket has dropped to 51%, while Harris remains at 44%. You should know that the cause of this wave of market rise was Trump's shooting, after which Trump's winning rate increased significantly, directly forcing Biden to withdraw from the election. At that time, Trump won the support of all swing states, with a winning rate of more than 90%, and Musk also personally supported cryptocurrency. Therefore, a large part of the rise in the crypto market came from the expectation of Trump's election. Now this expectation is getting lower and lower, Harris's attitude towards crypto is unclear, and it is likely to be unfriendly, so it is normal for the price of the currency to fall.
The fourth reason is that whales in the crypto market are going to liquidate their positions again. This time it is Jump, which was actually targeted by the CFTC as early as June 20. Jump was hit hard by the previous Luna crash. Although it has a large amount of ETH in its account, it may have a lot of hidden liabilities. The reason for Jump's collapse this time is that after Japan's interest rate hike, it long on the yen in the yen exchange rate arbitrage. As a result, the yen had a black swan event, and Jump's funding gap exceeded its tolerance. So it sold ETH frantically in the currency market to fill the gap. It is said that this wave of ETH smashed more than 400 million US dollars. Currently, 97% of the funds in its account are USDT. Jump should be leaving the market. Bitmex founder Arthur Hayes also stood up and said that Jump was about to fall and liquidate its crypto assets.
The last reason is that Buffett liquidated nearly 50% of Apple and Bank of America stocks. This is considered in the industry to have a greater impact on market confidence than the 4.3% unemployment rate. This is the data from June, which makes people think that Buffett saw the US recession in June and completed the operation. The US stock market has already plummeted on Friday. Today, almost all stock markets have begun to plummet in the Asian session. The Nikkei Index and the South Korean stock market have even been circuit-breakered. The Nasdaq index and S&P futures have also plummeted. Buffett's operation has a huge impact on the confidence of the global stock market. I think the performance of the US stock market tonight will be critical. If the United States also begins to panic, the chain reaction will cause the currency market to continue to bottom out. If the Federal Reserve carries out rescue operations, or the sentiment of buy the dips rises, then the plunge on August 5 will become the biggest bottom of this round of bull market, and the violent bull market in the fourth quarter can still be expected.
Finally, there are still many things that are not written down, such as specific opportunities and specific decisions. These things are often not something that can be summarized in one article.
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