Cryptocurrencies experience significant declines
(MENAFN) CryptoCurrencies experienced significant declines on Monday, driven by increased risk aversion in global markets as investors sought safer assets. The downturn in the crypto market comes amid growing concerns about a potential United States recession and escalating geopolitical tensions in the Middle East.
Bitcoin, the leading cryptocurrency by market capitalization, fell by 12.7 percent, trading at USD52,723 as of 11:37am United Arab Emirates time. This drop follows a 13.1 percent decline last week, marking the worst performance since the collapse of the FTX exchange.
Ether, the second-largest cryptocurrency and the foundation of the Ethereum blockchain, saw its steepest decline since 2021. The price of Ether plummeted by 19.24 percent, settling at USD2,343.99. Most other major cryptocurrencies also reported substantial losses.
Bhavik Mehta, Deputy Head of Research – Investment Products at Century Financial, noted that the market has entered a “sell-everything” phase. He attributed this sell-off to the recent interest rate hike by the Bank of Japan, which triggered a massive sell-off in Japanese risk assets. This rate hike led to a significant unwinding of carry trades, where investors borrowed cheaply in Japan and invested in higher-yielding assets elsewhere, contributing to a rise in the Japanese yen.
The unwinding of these carry trades has had ripple effects on global markets, with cryptocurrencies, known for their high risk and volatility, being particularly hard hit. As a result, major cryptocurrencies like Bitcoin and Ethereum have seen their values drop by over 20 percent in recent days. Investors are now grappling with the full impact of the Bank of Japan’s rate hike, leading to a challenging period for the crypto market.
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