Many woke up today in a less-than-ideal New Year's mood: even though it seemed like it was just one day of winter, just a little while before the holidays, the crypto market is down $160 billion, $100 billion of which is just 🟠. And yes, while we were watching the red candles, gold calmly hit a new all-time high of $4,250. Now, in layman's terms:
The main trigger is Japan.
Yesterday, the yield on 2-year bonds there exceeded 1% for the first time since 2008. Large funds aren't idiots: if there's a place where they can safely store their capital, they dump some of it there. And they always leave the riskiest sector. And guess what's the riskiest? Yes, crypto. That's why it's the first to start losing money. So there you have it, a $160 billion loss.
🗺 Against this backdrop, gold is rising because gold is a perpetual mattress, the most conservative asset, even before the concept of markets existed.
Now, an important point that many people don't even know about: today, the QT program—the Federal Reserve's balance sheet reduction—ends. Theoretically, this should return about $100 billion in liquidity to the markets each month. It would be logical to think that some of this liquidity would flow into crypto... 🔎 but no. The history of recent months shows that money will stubbornly flow into funds, index giants, and gold. And under Trump, this trend is only accelerating—crypto is clearly not his priority yet, although it would seem...
🏦 In short, to put it as simply as possible:
safe assets have become more profitable in Japan → large capital flows there → crypto experiences a strong outflow → gold evaporates → and the new liquidity from the Fed is not yet coming to us.
I believe this is a normal market reaction. ⚙️ In my opinion, the algorithm of large investors simply worked: portfolio rebalancing, zeroing out risks, etc.
These kinds of shocks have always happened. The most interesting thing is that I already wrote an analysis of ETH before the main spill, but that doesn't invalidate anything I said there, so we expect a market pullback 🚀
