Insights from Industry Experts by U.Today

Long-time DeFi researcher Miles Deutscher has identified several factors contributing to the current downturn in the cryptocurrency market, describing it as a “perfect storm” caused by a mix of global macroeconomic conditions and significant developments within the crypto space.

According to Deutscher, recent volatility in the market can largely be attributed to geopolitical tensions worldwide and shifts in sentiment surrounding the U.S. presidential election. Additionally, the decline of the Japanese yen has played a role in driving down crypto prices. The yen experienced a notable rise of 10% in under a month, closely aligned with the performance of the U.S. dollar. Concurrently, the Stock Average 225, which tracks major Japanese companies, faced its steepest decline since the infamous Black Monday of 1987.

Investor anxiety was further exacerbated by concerning unemployment figures released in the U.S., which showed a rise to 4.3% in July, an increase of 0.2% from June. Heightened fears of an impending recession have intensified discussions around the need for emergency interest rate cuts by the U.S. Federal Reserve in August or September.

On the crypto-specific side, bearish catalysts have also played a significant role. The impact of the Mt. Gox compensation distribution remains uncertain, while major trading firm Jump Crypto appears to have been offloading its positions. Reports indicate that Jump Crypto recently unstaked over 120,000 wETH from Lido Finance for immediate sale. Additionally, a notable whale transferred $120 million in SOL from various validators to a prominent exchange.

These developments have culminated in one of the most significant market pullbacks in recent months. In the last 24 hours alone, liquidations in crypto positions reached $1.2 billion, the highest total since mid-April, with 85% of these being long positions. The largest single liquidation occurred on Huobi, where a trader lost a long position worth $27 million in Bitcoin.

As the market continues to face these challenges, the effects of both macroeconomic factors and specific crypto events will likely remain in sharp focus.