Thought last week was bad? Well, think again. The global market condition has further deteriorated with serious carnage spreading rapidly across the globe. The magnitude of today’s global sell-off is certainly alarming, though not unprecedented. The veterans among you or anyone older than say 50 or something have seen similar global sell-offs and most were massive buying opportunities.
While I was talking to a broker in Hong Kong, a timely update from a trusted partner who specializes in digital asset investments popped up on my screen.
Here is a section:
Bitcoin and Ethereum fell on Monday to multi-month lows as worries over the convergence of geopolitical tensions, the near-certainty of a US recession regardless of any emergency rate cuts, the global impact of the Yen unwind, stock market corrections, and political uncertainty have triggered a rush to safe-haven assets. Last weekend also saw a ramping up of tension in the Middle East as the US and UK moved military assets into the Gulf to support an Israeli strike against Iran.
This is a case of TradFi-specific global macro correlations causing crypto volatility to spike as the macro dominates the micro. Still, the crypto ecosystem is sound and on a much better footing than in 2022.
Crypto markets have fallen alongside other assets, including global equities, in a broad selloff after the Nasdaq slid 3.4% last week into correction territory, capping off the tech-heavy index’s worst three-week stretch since September 2022.
Led by a drop of 11% in Bitcoin in the past 24 hours and a 21% plunge in Ethereum, the overall value of cryptocurrencies sank by around USD270 billion in value over a 24-hour period, while over a USD1 billion in value was liquidated on leveraged positions impacting over 278,000 traders.
While the impact of this event can be compared to other major crashes such as the FTX collapse and Terra Luna crash, it is important to note that it has been driven primarily by factors outside of cryptocurrency markets and more akin to the initial COVID-19 market shock.
We believe that this is a temporary shakeout that will be short-lived and is an excellent buying opportunity. The crypto markets should recover as rapidly as they fell and be healthier for it.