- The Japanese stock market crash surpasses Black Monday and impacts global markets, including significant crypto liquidations.
- Geopolitical tensions in the Middle East escalate, fueling fears of a regional war and panicking crypto markets.
The crypto markethas experienced a significant downturn , resulting ina liquidation of 1 billion dollars in just 24 hours . This recent crash has caused concern and prompted analysts to look at the underlying causes.
Impact of the Japanese stock market on cryptocurrencies
The Japanese stock market experienced the worst two-day plunge in recent history, surpassing even the infamous Black Monday crash of 1987.
Japanese stocks (Nikkei 225) plunging over 25% from their highs to 30,900 support. If this support can hold, then could be a nice bounce coming
Jap stocks are crashing for two reasons
1) BOJ hiking interest rates to control inflation and expected to continue hiking -> market… pic.twitter.com/m4NCHIpLTh— Adam Khoo (@adamkhootrader) August 5, 2024
This downturn also affected the crypto market due to the interconnectedness of global financial systems.
Traders who had previously bought yen at low prices to leverage their positions are now facing losses. This has also led to extensive selling in cryptocurrencies. Adam Khoo, a well-known market analyst, pointed out that the Nikkei 225 index has slumped by more than 25% and tested a critical support level at 30,900 points .
The Bank of Japan’s decision to raise interest rates to curb inflation and the stronger yen making Japanese exports less competitive have added to market fears and contributed to the sell-off in other markets, including Taiwan and South Korea.
Geopolitical tensions fuel market fears
Geopolitical unrest, particularly in the Middle East, has also played a key role in the recent volatility of crypto markets. The assassination of a Hamas leader by Israel and subsequent military activity in Lebanon has fueled fears of a wider regional conflict.
This possibility has ledto panic selling as traders fear the impact of a full-scale war on global financial markets. Patrick Bet David, commenting on these developments, pointed to the readiness of an underground bunker in Jerusalem prepared for extended use in the event of war, pointing to serious regional tensions.
Market uncertainty following US Federal Council decisions
The instability of the crypto market is further exacerbated by the Federal Reserve’s inaction on expected interest rate cuts. With the US national debt at over 35 trillion dollars and growing inflation concerns, the market has reacted strongly negatively.
Rumors that the Fed may cut interest rates to mitigate the impact of the Japanese market downturn have added to the uncertainty and triggered further liquidation in the crypto sector.
