The recent crypto crash resumed this week, with Bitcoin and most altcoins being in the red. Bitcoin price dropped to $84,000, while altcoins like Zcash, Story (IP), Celestia (TIA), Sui, Pepe, and Sui were the top laggards, falling by over 10%. This article explores some of the reasons why cryptocurrencies are tanking today.
Crypto Crash Happened After Hawkish BoJ Statement
One of the top reasons behind the ongoing crypto crypto is that odds of the unwinding of the Japanese yen carry trade rose this week. This happened after the Bank of Japan (BoJ) Governor hinted that he might decide to hike interest rates this month.
Such a rate hike will happen as the Federal Reserve slashes by 0.25%, creating a wider spread between the US and Japanese monetary policy.
The statement pushed more crypto investors to remember what happened last year when the BoJ delivered its first interest rate hike in over a decade. That shocker pushed Bitcoin and most altcoins much lower as traders unwound their carry trade.
READ MORE: Is the IREN Stock Price a Bargain or at Risk of a Deeper Dive?
Soaring Liquidations Have Contributed to the Crypto Market Crash
The other notable reason why the crypto crash is happening is that liquidations have jumped in the past few days. Data compiled by CoinGlass shows that liquidations soared by over 700% in the last 24 hours to $990 million.
The report shows that over 271k traders were liquidated in this period, with Bitcoin positions worth over $408 million being wiped out. Ethereum and Solana positions worth over $239 million and $47 million were liquidated in the last 24 hours. Some of the other top liquidations were tokens like Dogecoin, Hyperliquid (HYPE), Litecoin, and Cardano.
The soaring liquidations coincided with the crashing open interest in the futures market, which dropped by 4.70% in the last 24 hours to $125 million. Also, the Long/Short ratio has moved to 47%/52%, a sign that most traders are now bearish.
Concerns About Tether (USDT)
The ongoing crypto market crash also happened a few days after S&P Global sent a chilling message about Tether, the biggest stablecoin in the world.
In its note, the ratings agency placed Tether at the lowest level of the stability scale, pointing to its reserves, which are based on assets like gold, Bitcoin, corporate bonds, and loans.
Indeed, recent data showed that Tether has become one of the biggest holders of gold in the past few months. Its purchasing has likely helped to push its price to a record high.
Therefore, S&P Global warned of a potential de-pegging of the USDT if these assets plunge. Such a move would be a big one as USDT is one of the biggest assets in the crypto industry with over $184 billion in assets. It is also the anchor of the crypto industry, with transactions with billions of dollars moving through it.
The crypto market crash is also happening after Strategy’s CEO hinted that the company may opt to sell its Bitcoin holdings if the enterprise value mNAV multiple falls to the negative zone.
READ MORE: Is the IREN Stock Price a Bargain or at Risk of a Deeper Dive?
