Crypto lost over $277B in total market cap between Aug. 3rd and 4th, with Bitcoin briefly dropping beneath $50K and Ethereum dropping as low as $2.1K.
What’s the Scoop?
- Market Sell-off: Amidst the drop, $1B in futures were liquidated in the past 24 hours — mostly long traders.
- Contributing Factors: The sell-off was exacerbated by a stronger Japanese yen and rumors of market maker Jump Trading liquidating its crypto business. Jump has moved over $450M in ETH to Binance and OKX since Saturday.
- TradFi Problems: This movement has not only impacted crypto, with the S&P 500 down 2.5%, the NASDAQ down 3.1%, and the Dow down 2% within 30 minutes of the NYSE opening. Additionally, brokerage accounts such as Fidelity, Charles Schwab, and Etrade all experiencing outages.
- Strong Bounce: Despite the painful drop, majors such as Bitcoin, Ethereum, and Solana have had strong recoveries in the past 2 hours — up ~8%, ~14%, and ~18% from their lows respectively. As a result, Bitcoin ETFs saw nearly $3B in volume during their first hour.
Bankless Take
With recession fears high and the Japanese yen experiencing extreme volatility, the entire market has taken a huge hit, with Jump’s crypto exit adding fuel to the fire. This morning though, the U.S. non-manufacturing PMI came in higher than expected for July, raising questions about the immediacy of a U.S. recession, and contributing to the sharp bounce we’ve seen this morning. The environment remains extremely uncertain though, with volatility especially high as it often is during summer months. All this being said, crypto historically has rewarded bold action when it seems at its worst.