Bitcoin falls to a multi-month low amid stock market crash. Black Monday: What happened to the crypto market?
The crypto market will be open from Aug. 4 through 5. experienced a significant drawdown. Bitcoin (BTCEthereum (ETH) — $2,200. After BTC, ETH and other top 10 crypto assets by capitalization were all in freefall.
A significant drawdown caused A wave of futures contracts liquidations. In a single trading day, this figure amounted more than $1 billion with an overwhelming majority of long positions.
What is causing crypto to crash?
The crash of the crypto market can be attributed to several factors. Crypto shows an inverse correlation to stock markets that have been falling since last Monday. They are in turn influenced also by the geopolitical tensions of the Middle East.
Uncertainty also increases due to the latest changes made by the Bank of Japan in its policy, and because the U.S. Federal Reserve has refused to lower interest rates.
Community members have also discussed the participation of a major player in the dump. Analysts on-chain hint that Jump Crypto, the market maker, is being liquidated. Jump Crypto had unlocked and then sold 120,000 wETH on Lido, causing Ethereum to crash.
Over the past eleven days, Spot On Chain experts have noticed that more than 100,000 ETH has been transferred to wallets believed to be associated with Jump Trading. centralized exchanges. The company began moving assets on July 25 — two days after the official launch of the Ethereum ETF in the United States.
On August 4, 17,576 more ETH valued at $46.78 millions were taken from Jump Trading. Assets transferred on exchanges totaled more than 104,000 ETH. Arkham Intelligence says that according to its platform, Arkham Intelligence, the firm still holds assets of $109.4 Million in rETH, wstETH, and Ethereum.
The crypto market is also being fuelled by Mt. Gox‘s payments to creditors, weak ETF Changes in political dynamics in the United States
Experts say
Peter Schiff, an economist and the president of Euro Pacific Capital’s brokerage division, believes that by the time trading starts on the U.S. market the trend is likely to continue.
Gold’s price has fallen by 45% since its peak in November 2021. Gold has recovered from its lows to reach a new high of $50,000. But it’s worth waiting until the market opens.
DeFi Mochi is a crypto-analyst who uses the name X in X. He believes that massive fund sales are the primary reason for the rapid fall of ETH. Players such as Paradigm, and Grayscale Contributed to the decline.
What is the black swan of crypto?
It is important to note that the word “you” means “you”. “black swan” The theory is the same for traditional markets and cryptomarkets. Investigate how it happens.
A bestseller author and economist developed the theory “The Black Swan”, Nassim Nicholas Taleb. This term is used to describe events which are difficult to predict, or that have been prominently discussed but not addressed with serious consequences.
Taleb states that, for many centuries, it was believed all swans wore white plumage, while a black one would be a sign of impossible. When Europeans arrived in Australia, they were surprised to see black swans.
Taleb refers to the Global Financial Crisis of 2008, World War I and the Internet as black swans in his book.
What are the commonalities between these unplanned events? For a black-swan event, three characteristics are required.
The event has to be unlikable. Black swan events are statistical anomalies. Probability of such an event is very low. There may be countless instances when the same conditions have not led to such a result.
In addition, black swan events have an extreme effect: they can significantly impact the environment around them. It can have a positive impact, but most of the time it’s catastrophic.
A black swan event may seem unexpected, but it is easily explained. People may realize later that despite black swan event’s unexpectedness, such events were predictable.
Crypto market black swans:
The FTX
In 2022, the biggest black swan was likely to be the fall of FTX. Crypto exchange was facing legal troubles, instability within and an SEC inquiry. Markets crashed when panicked traders tried to withdraw funds. Many FTX customers were unable to get their entire money back.
Terra Crash
A number of cryptocurrencies can crash together due to unpredictable events. One cryptocurrency will crash in May 2022. Terra One user, who had a significant amount of UST coins (now called USTC), sold them all. It led to a crash in UST and users started to move their funds into stablecoins.
Coronavirus Pandemic
In March 2020, one of the first black swan events for cryptocurrencies appeared — the coronavirus pandemic, which affected all markets, including crypto. Willy Woo noticed in March of 2020 that there was something odd happening on the market. It was also reflected by investor activity. Woo said that there was a black-swan in the market.
Bitcoin dropped almost 50% in just one single day, after World Health Organization official recognized pandemic. Market capitalization of all cryptocurrencies dropped by 40 percent in just one day. This meant a lot of money for some investors. financial ruin.
Can you predict and prepare for a Black Swan event?
This sudden and sharp decline in the crypto-market, as well as Bitcoin’s fall to an all-time low could indicate that there was no preparation for what happened over the past few weeks. A black swan, however, implies more prolonged drawdowns on the crypto markets, and it is premature to discuss its possible occurrence.
Black swan events will always be a part of the crypto-market. Black swan events are not only unpredictable, they also have the potential to be very destructive. It is important to prepare for these events and develop a plan in the event they happen.
It is important to keep in mind that black swans are unpredictable. There is no way to predict their exact timing or consequences. Investors can prepare for these events and take advantage of them by understanding their nature and being familiar with them. work.
“This article is not financial advice.”
“Always do your own research before making any type of investment.”
“ItsDailyCrypto is not responsible for any activities you perform outside ItsDailyCrypto.”
Source: crypto.news