Bitcoin briefly dipped to $49,121 before bouncing back to $51,657 amidst a $270 billion selloff in the crypto market. This downturn has been driven by fears of a US recession and the Bank of Japan’s interest rate hike, which has stirred turmoil across financial markets.
The cryptocurrency market saw a dramatic drop of around $270 billion in just 24 hours, as Bitcoin fell nearly 20% to its lowest level since February. Ethereum also suffered, dropping 21% to $2,300, wiping out its annual gains. Other major cryptocurrencies, including Binance’s BNB and Solana, also faced significant declines.
This crypto market plunge aligns with a broader equities selloff, particularly in Asia-Pacific markets, following a 7% drop in Japan’s Nikkei 225. The Bank of Japan’s decision to raise its benchmark interest rate to a 16-year high has sent ripples through global financial markets, causing a massive unwind of Yen carry trade positions and impacting US stocks.
The US Nasdaq has also entered correction territory, marking its worst three-week performance since September 2022, exacerbating the decline in risky assets like cryptocurrencies. The Fed’s recent decision to maintain its benchmark rate, without signaling a cut in September, added to market uncertainty, prompting traders to anticipate a 100% chance of a rate cut.
Growing concerns about a potential US recession, driven by soft economic data and rising geopolitical tensions, have further fueled the selloff. Market analyst Tony Sycamore from IG noted that Bitcoin and other cryptocurrencies, being risk assets, are highly sensitive to market volatility. Bitcoin is currently testing crucial support levels, and while it has recovered from $49k, it remains below the critical $53,000 mark.
Amid the market chaos, the FBI has issued a warning about rising crypto scams. The agency cautioned users to be wary of unsolicited communications about account issues and to verify problems through official channels. This warning follows a surge in crypto-related fraud and hacking, with nearly $1.4 billion in crypto stolen in the first half of 2024—more than double the amount from the same period in 2023. Increased token values have made cryptocurrencies more attractive targets for criminals, according to Ari Redbord from TRM Labs.
