Although the worst of the crypto massacre is over, the market remains in the background.
For some analysts, this drop is not a surprise. In fact, veteran trader and widely followed crypto commentator Peter Brandt says that this is a typical Bitcoin habit after the “halving. “
(The cryptocurrency halving is a deflationary occasion in which praise for mining a new cryptocurrency is cut in half in an effort to slow growth. The last Bitcoin halving took place last April) .
In an August Five X article, the analyst said that “BTC’s decline from halving is now that of the halving market bull cycle from 2015 to 2017. “
On July 9, 2016, Bitcoin suffered its halving moment when the cryptocurrency was trading around $650. Within a month, Bitcoin fell by about a third to $450 before embarking on one of the biggest bull markets, reaching $20,000 in late 2017.
Some analysts, however, disagree on the reasons for the Bitcoin withdrawal.
Did Bitcoin get caught in the yen’s crossfire?
While Brandt attributes Bitcoin’s sell-off to half-heartedness, a chorus of analysts attributes it to a broader sell-off in the market, triggered by the yen’s so-called carry.
One of them is Khushboo Khullar, a partner at Lightning Ventures, a company that invests in crypto-related companies. Khullar argues that the crypto market has fallen due to the onslaught of liquidity.
Matt Hougan, chief investment officer at Bitwise Asset Management, says Khullar.
In a recent interview with CNBC, he said that Bitcoin simply got caught in the crossfire of a broader sell-off due to the yen’s trading fall. According to him, “nothing has fundamentally replaced Bitcoin. “
“We’re seeing a sell-off in the global capital market that affected the crypto market during a weekend of low liquidity, but nothing has fundamentally replaced it relative to Bitcoin or crypto, which we’re closer to a Fed rate cut and quantitative easing. . ” Says.
What is yen trading?
Although the end of the yen industry sounds like complex monetary jargon, the fundamental concept is undeniable to understand.
In short, a gigantic number of investors, who had borrowed Japanese yen at low interest rates to invest in higher-yielding assets, began selling those investments and repaying their loans in yen.
This leak was triggered by the Bank of Japan’s quarter-point hike in July, which simply made the import industry less successful and riskier.
The result was that investors rushed en masse to liquidate their purchased assets with an expensive yen, leading to a global sell-off in stocks, commodities and cryptocurrencies.
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