Crypto Market Suffers "Time-Triggered" Algorithmic Sell-Off, Bitcoin Plunges Below $54,000

Crypto Market Suffers "Time-Triggered" Algorithmic Sell-Off, Bitcoin Plunges Below $54,000The cryptocurrency market continued to face heavy selling on Monday, following a weekend slump, with Bitcoin dropping below $54,000, at one point experiencing a daily decline of over 10%. Ethereum also plummeted below $2,300, witnessing a loss of over 13%

Crypto Market Suffers "Time-Triggered" Algorithmic Sell-Off, Bitcoin Plunges Below $54,000

The cryptocurrency market continued to face heavy selling on Monday, following a weekend slump, with Bitcoin dropping below $54,000, at one point experiencing a daily decline of over 10%. Ethereum also plummeted below $2,300, witnessing a loss of over 13%. As of last Friday, Bitcoin had accumulated a 13.1% drop, marking its largest decline since the FTX collapse. Other cryptocurrencies like Ethereum and Dogecoin also suffered significant falls.

"Time-Triggered" Algorithmic Program Sparks Sell-Off

Media analysis suggests that this sell-off appears to be triggered by a "time-triggered" algorithmic program. The program has been initiating sell orders at the same time (10 am EST every day, coinciding with the US market open) for the past seven trading days. Notably, this algorithm remained active over the weekend, potentially leading to high-frequency trading (HFT)-driven selling and shorting, forcing leveraged long investors to capitulate.

Jump Trading Liquidates Hundreds of Millions of Dollars in Positions, Intensifying Market Panic

Data reveals that crypto "market maker" Jump Trading is liquidating hundreds of millions of dollars in positions. The trading firm has been aggressively re-pricing cryptocurrencies by selling and shorting billions of dollars worth of various cryptocurrencies during periods of low market liquidity, simultaneously repeatedly buying buy orders to ensure the worst execution price. Since August 3, the crypto division of Jump Trading, Jump Crypto, has seen approximately $300 million flow into its marked address, while the company's wallets have witnessed an outflow of roughly $80 million in the same period, primarily to cryptocurrency exchanges like Coinbase, Gate.io, and Binance. This movement of funds is ongoing.

Global Stock Market Volatility and Geopolitical Risks Amplify Market Panic

Behind this liquidation-driven panic, the primary contributing factors are global stock market volatility and geopolitical risks.

• US stocks plunged on Friday, and the dollar plummeted against the yen, anticipating a significant drop in Japanese stocks when they open on Monday. A rough estimation suggests a potential 6-8% decline on top of the 10% drop in the Nikkei index over the past two days. After the recent major policy misstep by the Bank of Japan, Japanese stocks have entered a bear market in the past few days. This could force the Bank of Japan to revert back to easing and lowering interest rates after just a few days of slightly raising them, potentially pushing the Japanese economy back into a recession.

• Market concerns are mounting over a possible escalation of conflict between Iran and Israel. The Speaker of the Iranian Parliament has vowed a strong response to the situation, asserting that Israel and the US will pay for the death of Khania. The Israeli Defence Minister has also declared that Israel is prepared to handle any attacks. Analysis indicates that Bitcoin tends to plummet with each escalation of the conflict. Similar significant drops are expected to recur when the next "conflict" unfolds.

Conclusion

The cryptocurrency market currently faces multiple challenges, including a large-scale sell-off triggered by a "time-triggered" algorithmic program, panic stemming from Jump Trading's liquidation of hundreds of millions of dollars in positions, and global stock market volatility and geopolitical risks. The market outlook remains uncertain, and investors are advised to proceed with caution.