jakiro
Author: Mia, ChainCatcher
Amid the global financial panic plunge, the cryptocurrency market ushered in a new turmoil.
In the past 24 hours, global cryptocurrencies have fallen by more than 10%, and the prices of major cryptocurrencies such as BTC and ETH have all dropped sharply. With the wave of selling on Sunday evening in the US session, BTC plummeted to its lowest level since March, while ETHCompared with the high of $4,000 on March 12, it has been “halved”.In the past 24 hours, ETH has fallen by more than 20%, with a weekly decline of more than 30%, completely erasing the gains this year.
As the plunge is over, wailing everywhere.
Why did ETH plummet?
Japanese Yen appreciates, global pay
In early August, the Bank of Japan announced a 25 basis point rate hike, a monetary tightening policy that caused the yen to soar, while Japan’s Nikkei stock index fell sharply.The volatility has spread rapidly to global markets, including the U.S. stock market and cryptocurrency market.The Nasdaq index fell more than 5% in the last two trading days, and on Sunday evening, Nasdaq Futures fell 2.5%.
In addition to the Bank of Japan’s hawkish attitude, the Federal Reserve’s policies have also exacerbated market uncertainty.Although the Fed kept interest rates unchanged, its ambiguous attitude towards the September rate cut surprised market participants.Almost everyone originally thought that the rate cut was a foregone conclusion, but the Fed’s ambiguity caused the market to reassess its policy direction.
Market makers rush to get ahead
Behind this wave of ETH plummeting in the international financial environment, market makers’ large-scale transfer of tokens has also caused panic in the ETH market.
Recently, Jump Crypto transferred hundreds of millions of dollars worth of cryptocurrency to the exchange, triggering speculation that it may be preparing to sell a large number of assets.
Data from blockchain analytics platform Arkham shows that Jump Crypto’s address has flowed in about $300 million since August 3, most of which comes from the addresses of exchange wallets.At the same time, the trading company’s wallets flowed out about US$80 million during the same period, mainly to exchanges such as Coinbase, Gate.io, and Binance.The flow of funds is still continuing, and most of the funds flowing exist in the form of ETH.
In fact, according to cryptocurrency detective EmberCN, a few days after the launch of the U.S. spot Ethereum ETF on July 25, Jump seems to have started redeeming Lido’s wstETH worth more than $500 million in exchange for ETH.Jump still holds about $130 million in pledged ETH, while nearly $200 million in unpended ETH has entered the exchange.
In addition, Jump Crypto also transferred USDC, USDT, UNI and SHIB to cryptocurrency exchanges.As more funds pour into exchanges, crypto people are now speculating whether Jump is ready to clear hundreds of millions of dollars in cryptocurrency.As an important participant in the market, Jump Crypto’s selling behavior undoubtedly brought huge pressure to the market, especially in the sensitive period after the launch of ETFs, which was interpreted by the market as a consequence of the future trend of Ethereum.Optimistic.
In fact, there have been reports that the U.S. Commodity Futures Trading Commission is investigating Jump Crypto’s cryptocurrency investment activities, which undoubtedly adds more uncertainty to its current move.
Currently, Jump Crypto’s transfer operation continues.
According to Spot On Chain monitoring, JumpTrading has transferred 17,576 ETHs to CEX again (worth $46.78 million) in the past 24 hours.Currently, JumpTrading still holds 37,600 wstETH (worth $101 million) and 11,500 STETH (worth $26.3 million).According to Scopescan monitoring, after checking Jump Crypto’s Binance deposit address, it has deposited $91 million in ETH since last Friday.
In addition, other market makers and VCs are also transferring ETH on a large scale.
According to The Data Nerd monitoring, Wintermute transferred 22,460 ETH (approximately $52 million) from its market maker account and other trading platform accounts to Binance deposit addresses in the past 24 hours, and was then transferred to Binance Hot Wallet.
Within the past 16 hours, Symbolic Capital deposited 4,446 ETH (about 12.16 million US dollars) into Binance and then transferred it to Binance Hot Wallet.
Leverage pedal
In addition to large-scale ETH transfer actions, with the sharp decline in ETH, a large number of on-chain lending liquidations are taking place.
According to Parsec data, the number of borrowing and liquidation on DeFi exceeded US$320 million in the past 24 hours, setting a new high this year.Among them, the liquidation volume of ETH collateral reached US$187 million, wstETH reached US$77.9 million, and wBTC reached US$32.5 million.
According to on-chain analyst Ember Monitor, ETH fell sharply this morning, causing some ETH whales that used leverage to be liquidated, further pushing ETH prices to fall by more than 20%.
In fact, even the giant whale is hard to escape this big drop.According to the on-chain data released by Lookonchain on X, a giant whale address has been increasing its position in the decline of ETH and has recently purchased another 4,000 ETH (worth $12.58 million).Since May 29, the giant whale address has increased its holdings of 17,012 ETH to a value of US$61 million, with an average price of US$3,587 per ETH.Currently, the price of ETH has fallen to around US$2,300, with a book loss of approximately US$21.89 million.
Amid such turbulent cryptocurrency markets, the confidence of ordinary investors has been hit hard.According to data, the Panic and Greed Index today dropped to 34, and the level changed from greed to fear (the index data was 37 yesterday).A large number of investors are in panic, and panic selling further aggravates the market’s downward trend and forms a vicious cycle.
ETFGood news is fulfilled, the marketReverse decline
The plunge in ETH is not entirely caused by current market panic, but is closely related to the positive implementation of ETFs.
Since the beginning of this year, the crypto market has recovered overall, and ETH has been relatively stable and has rebounded to above $4,000 for a time.
With the acceleration of the ETH ETF process, the rise of ETH seems to be insufficient.The launch of ETH ETFs is generally considered good news by the market.However, the fact is contrary to expectations. After the official launch of the ETH ETF, the ETH decline not only did not ease, but further intensified, while the ETH ETF was in a net outflow, with net outflow reaching US$341 million in the first week.
Why did ETH ETF not drive ETH price up as expected?
Expectations are too high:The gap between market expectations and reality is an important factor.Before the launch of ETFs, the market generally had too high expectations for them, believing that this would bring a large amount of new funds to ETH to bring significant room for upward.However, actual capital inflows may not meet this expectation, but instead flow out, causing market disappointment to spread.
Money flow:The real net purchase amount of ETH ETF is much lower than market expectations. Although the front-end derivatives flow in ETFs are large, the actual funds flowing into ETH are limited, which is not enough to support its price increase.On the contrary, due to excessive market expectations, when actual capital inflows are insufficient, it is more likely to trigger market selling behavior.
Investor preferences:ETH is more regarded as a technology asset, mainly attracting investors such as venture capital companies, Crypto funds, and technical experts.In contrast, as a macro asset, BTC is more attractive to more attractive institutional investors such as macro funds and pensions.Therefore, ETH may face more challenges in attracting a wide range of investors.When the ETH ETF is launched, if it fails to attract enough broad investors, it is easy to lead to an imbalance in market supply and demand.
Economic benefits:Although Ethereum is technically innovative, its actual economic benefits do not support its current high valuation.At present, Ethereum has not yet developed a compelling application to improve its economic benefits. Key indicators such as fee income and annualized income have performed poorly. In the eyes of analysts, its price seems to be “unworthy”.When the market realizes this, it is easy to trigger a re-evaluation of the true value of ETH, resulting in an increase in selling behavior.
In fact, the launch of ETH ETFs also marks a new stage in the market in a sense, with investors beginning to re-examine the value and risks of cryptocurrencies, and this market adjustment may lead to funds redistribution, which will also be a big deal.Probability triggers certain technical selling orders, and some investors may use ETFs as hedge tools to balance their portfolios by selling ETH.
At present, under the dual pressure of ETFs being lower than expectations and the financial environment, Ethereum still needs to face many market challenges in the short term.
