Crypto Gets Obliterated Amid Global Stock Market Selloff

Crypto assets crashed violently alongside global markets this morning.

Bitcoin (BTC) is down 11% in 24 hours to $54,070 after tagging a low of $52,350 — its lowest level since February, according to CoinGecko.

ETH and Ether staking derivatives rank among the 20th to 25th worst-performing top 100 assets of the past 24 hours. ETH is down 19% at $2,350 after dipping to $2,120 — an eight-month low.

The combined cryptocurrency market cap tumbled 12.9% to $1.96 trillion in the past 24 hours, with more than $292 billion wiped from the digital asset capitalization. The market cap of digital assets was last below $2 trillion in February.

More than 217,000 leveraged crypto traders suffered $841.3 million worth of liquidations over the past 24 hours, according to CoinGlass. ETH accounted for $310 million worth of margin calls, followed by BTC with $255 million.

ETH traders were likely especially vulnerable to a bearish turn in the markets after many investors went long in anticipation of spot Ether ETFs launching two weeks ago.

All of the non-stablecoin cryptocurrencies ranked in the top 100 by market capitalization posted losses, led by Bittensor (TAO), Render (RENDER) and Lido (LDO), which shed close to a quarter of their value.

Stock Market Turmoil

The move was triggered by violent losses across Asian stock markets, with many major indexes suffering their worst sell-off since the COVID pandemic.

Japan’s Nikkei 225 index tumbled 8.6%, bringing its three-day losses to 14%.

Markets in neighboring countries similarly reeled, with the Taiwanese Taiex plummeting 8.2%, Singapore’s Straits Times Index dumping 3.1%, Hong Kong’s Hang Seng Index dipping 1.3%, and Australia’s All Ordinaries falling 3.4%.

South Korea’s Kospi also lost 5% before regulators intervened to briefly halt trading, with its daily loss now sitting at 7.4%.

The sell-off was precipitated by investors unwinding Japanese Yen carry trades en masse, with traders having previously borrowed Yen to take advantage of low interest rates in Japan and higher yields available in other markets.

The Yen has been a source of cheap leverage for more than a decade, with trillions of dollars of investor capital participating in the so-called carry trade. However, the currency’s sharp 12% move higher over the past month has forced investors to rethink their strategy.

Friday’s weak U.S. jobs data and prolonged high interest rates have ignited concerns that the world’s largest economy may be veering toward a recession. The bearish sentiment was exacerbated by expectations that the Bank of Japan may soon move to hike local interest rates, causing many investors to unwind their positions.

U.S. stock market futures indicate that the pain may not be over. The tech-heavy Nasdaq, which is already down 10% from its July high, is set to open another 5% lower today.