Bitcoin and Ethereum prices are experiencing a significant bear market, influenced by the unwinding of the Japanese yen carry trade and the current US presidential polls.

Ethereum has seen a sharp decline, dropping over 22% in the past 24 hours and 32% in the last seven days. Similarly, Bitcoin has fallen by 16% and 26%, respectively.

Factors Behind the Crypto Sell-Off

Several factors are contributing to the ongoing crypto sell-off, with the primary reason being the winding down of the Japanese yen carry trade. This follows the recent decision by Japan’s central bank to hike interest rates by 0.25%. Historically, Japan has maintained low interest rates and was the last central bank to exit negative interest rates.

This decision is crucial as it comes at a time when other central banks are considering rate cuts. The Bank of England, European Central Bank, and Swiss National Banks have all reduced rates, while the Fed has hinted at a potential cut in September.

Traders are unwinding a carry trade that has been profitable for years, borrowing from low-interest-rate countries like Japan to invest in higher-rate countries like the US.

Additionally, Bitcoin and Ethereum have dropped due to several other factors:

  • Polls indicating Kamala Harris has a higher chance of beating Donald Trump in the presidential race
  • Geopolitical issues in the Middle East
  • Rising chances of a US recession
  • Weak technical indicators

Peter Schiff’s Warnings on Bitcoin and Ethereum ETFs

Peter Schiff, a well-known crypto skeptic and gold advocate, has warned that Bitcoin and Ethereum Exchange Traded Funds (ETFs) could face a liquidity crisis. He argues that ETFs will need to account for weekend losses and those occurring on Monday. If ETF investors decide to sell, liquidations could overwhelm the spot market.

#Bitcoin just sank below $58K. If it takes out its July low by tomorrow’s U.S. #StockMarket open, #BitcoinETFs will gap down by more than 15%, 30% below their Jan. highs. A loss of that magnitude may finally trigger mass ETF liquidations. If so, brace for a #Crypto black Monday.

Despite his negative stance, historical data shows that both Bitcoin and Ethereum have significantly outperformed gold. Bitcoin has risen by 21% this year, while gold is up by 15%. Over the last five years, Bitcoin has surged by 360%, compared to gold’s less than 80% increase.

Stay updated with the latest news and trends in the cryptocurrency market by exploring more articles on Global Crypto News.

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