BlockBeats News, December 2nd, Bitcoin briefly dropped below $84,000, plummeting over 8% at one point. The total crypto market cap fell below $3 trillion, with $974 million in liquidations across the entire network in the past 24 hours. Of these, long liquidations accounted for $851 million, with over 260,000 people being liquidated. In response to this crypto market crash, Arthur Hayes stated that the reason was the Bank of Japan hinting at a possible interest rate hike in December. The USD/JPY exchange rate fluctuated in the 155-160 range, indicating a hawkish stance from the Bank of Japan. Maclane Wilkison, co-founder of Threshold Network, stated that “The Bank of Japan’s signal of an impending rate hike has tightened global liquidity expectations and shaken risk assets.”
Furthermore, Phong Le, CEO of Strategy, stated that they would only consider selling Bitcoin when the company’s stock price falls below its net asset value and cannot obtain new funds. The market is concerned that if Bitcoin’s price continues to weaken, Strategy may be forced to sell Bitcoin due to a lack of cash to pay dividends.
Prior to this, S&P Global Ratings lowered Tether’s USDT stability rating from “Restricted” to “Weak,” warning that a Bitcoin price decline could lead to the stablecoin facing under-collateralization risks. Arthur Hayes mentioned in his post that if the “gold + BTC position” drops by approximately 30%, it would wipe out their equity capital, rendering USDT theoretically insolvent. In response to this, Tether CEO Paolo Ardoino addressed the “Tether FUD” and stated that the group’s equity is close to $30 billion. S&P did not consider additional group equity in their analysis, nor did they consider the approximately $500 million in monthly base profit from US Treasury yields alone.
Boris Revsin, General Partner and Managing Director at Tribe Capital, described this as a “leverage washout” that triggered a chain reaction throughout the market. Simultaneously, the macro environment has become increasingly less friendly: expectations of a short-term interest rate cut have waned, inflation remains stubborn, the job market is weakening, geopolitical risks are rising, and consumer pressures are increasing. These factors have led to a weak performance in most risk assets over the past two months. William Stern, Founder of Cardiff, stated: “With just over a week left until the Fed meeting and unclear inflation data, institutional investors are actively reducing risk. They are unwilling to hold highly volatile assets like Bitcoin to avoid any hawkish remarks from Powell.”
