Bitcoin accelerated overnight, falling below the $30,000 integer mark in early trading, and the lowest intraday drop to $29,730, hitting a new low since July 19, 2021. The weekly decline expanded to 12%, and the decline in the past 40+ trading days It has exceeded 37%. After the weekly cycle was extremely rare to receive six consecutive Yin, it was hit hard at the opening of this week, and there was no sign of “hemostasis” in the market.
The rapid decline of Bitcoin has led to a collective dive in the crypto market. CoinGecko data shows that the total market value of the crypto market has shrunk by more than $200 billion in the past 24 hours to $1.456 trillion, also hitting a new low since July 2021.
Coinglass data shows that in the past 12 hours, more than 830 million US dollars have been liquidated on the entire network, including 280 million US dollars of Bitcoin liquidation and 261 million US dollars of Ethereum liquidation. It has also become the hardest hit area for liquidation, with a liquidation of US$63.65 million during the same period.
This round of sharp decline in cryptocurrencies is not a one-man show. The “horror performance” of the global financial market since last week has already revealed its fangs, and the diving range of a number of risk assets represented by the US stock market overnight has been criticized for being too volatile. Big cryptocurrency market.
The three major U.S. stock indexes all hit new lows in nearly 52 weeks after three consecutive daily negative lines. The Dow Jones closed down more than 2% on Monday, the S&P 500 fell 3.2%, falling below the 4,000 mark, while the Nasdaq fell 4%, hitting a new low in nearly a year and a half. The European market did not allow US stocks to be “unique”, and the pan-European Stoxx 600 index closed in the negative again on Monday, hitting a new low in nearly two months.
In addition, many markets such as U.S. bonds, commodities, precious metals and non-ferrous metals all dived simultaneously. The 10-year U.S. bond yield soared to 3.2%, a new high in nearly three and a half years, while the short-term decline was more obvious. The 2-year yield / The steepness of the 10-year yield curve hit a recent peak; international oil prices fell by 6% on the day, and WTI crude oil prices fell below $103; gold fell more than 1% on the day, hitting a new low in nearly three months.
Fed’s ‘warning’ on Monday detonated panic in markets
The Fed’s semi-annual Financial Stability Report released on Monday local time said that liquidity conditions in major financial markets are deteriorating due to rising risks from the Russian-Ukrainian conflict, tightening monetary policy and high inflation. The report pointed out that since the end of 2021, the liquidity of newly issued U.S. cash government bonds and stock index futures markets has declined significantly.
The Fed said high U.S. inflation and higher interest rates could negatively affect domestic economic activity, asset prices, credit quality and financial market activity more generally.
From a financial stability perspective, since most participants enter the commodity futures market through large banks or broker-dealers that are members of the relevant clearinghouses, when clients face unusually high margin calls, these clearinghouse members will face risk.
After the Federal Reserve raised interest rates by 50 basis points as scheduled last week, although the market showed signs of short-term recovery on the day of the interest rate hike, since the day after the launch of the most aggressive interest rate hike policy in the past two decades, the global financial market broke out. The panic has not been seen for a long time, and this round of slump has continued to this day. Yesterday’s warning by the Federal Reserve that risks in the financial market are still rising has added fuel to the entire market, which is already mired in panic.
When rate hikes come knocking, maybe the Fed is no longer a lifesaver for the market
According to the British “Financial Times” report, Joost van Leenders, equity strategist at asset management firm Kempen Capital Management, said that investors no longer expect the Fed to put financial market stability in the first place as it did during the outbreak. And Eric Peters, chief information officer of hedge fund One River Asset Management, also said that the Fed will no longer provide protection, and we are now on our own.
It has become widely agreed that the Fed will focus on tackling persistently high inflation rather than stabilizing financial markets, and no one expects the Fed to abandon the path of raising interest rates because of the stock market slump.
While the Fed raised interest rates by 50 basis points last week, it also hinted that it will raise interest rates by the same amount at the next two meetings, but even so, financial markets are wondering whether the Fed’s aggressive interest rate hikes can be in the “fighting inflation” war. The results are still in doubt, and this has led to the emergence of a market shock.
Retail investors have been “bloodbathed”, and all profits have been taken back since the epidemic
Morgan Stanley’s statistics on exchanges and publicly released data to estimate profit and loss found that since January 2020, retail trading reached its peak profit in the first quarter of last year. Since then, profit has continued to decline, and the current profit has dropped to zero. A basket of individual stocks tracked by Goldman Sachs has fallen 32% since the start of the year, more than double the S&P 500’s decline over the same period.
Matthew Tuttle, CEO of Tuttle Capital Management LLC, said that a large number of retail investors have poured into the U.S. stock market since the epidemic, but due to their inexperience, they were intoxicated by the frenzied performance of the market stimulated by the Federal Reserve at the beginning of the market. When the wind of monetary policy changes, these Retailers simply don’t realize what they’re going through.
Back to the crypto market itself, the mouth of the abyss of the UST death spiral is “devouring everything”
During the past weekend, the “War on UST” has become the focus of the cryptocurrency market. Since last week, the risk of a run on UST has begun to appear, and the price of UST collapsed in the early morning this morning. Chainlink data shows that the price of UST against the U.S. dollar this morning was once It fell to 0.66, and the de-anchoring rate exceeded 30%. Even if the value rebounded slightly during the writing period, it is still only around 0.79, and the de-anchoring rate is over 20%.
Yesterday, Terra founder Do Kwon tweeted to ease the market’s concerns, saying that the $1.5 billion LFG decided to deploy would help UST tide over the crisis, and once the market recovers, this part of bitcoin will be returned to LFG. LFG does not intend to “give up” this part of the bitcoin position, and the funds will be handed over to professional market makers to maintain market stability and ensure the price of UST is anchored.
However, under the weight of the global financial market overnight and the plunge in the price of bitcoin itself, this bailout so far seems to have little effect, although the Luna Foundation Guard is deploying billions from its bitcoin reserves. The U.S. dollar is anchored to defend the price of UST, but the result of this big bet is still unknown, and the result of this forced bailout is to intensify the selling pressure in the Bitcoin market, and this is supplemented by the centralized liquidation of contract positions. Accelerate the decline of the Bitcoin market.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/fright-night-ust-death-spirals-mouth-of-the-abyss-is-devouring-everything/
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