Bitcoin and Ethereum prices fell sharply amid the winding down of the Japanese yen carry trade and US presidential polls. Ethereum dropped over 22% in the past 24 hours, while Bitcoin fell by 16%.
Ethereum (ETH) has fallen by 32% in the last seven days, whereas Bitcoin (BTC) dropped by 26% during the same period.
Japanese yen carry trade
The primary reason for the crypto sell-off is the winding down of the Japanese yen carry trade. This followed a 0.25% interest rate hike by Japan’s central bank last week.
Japan has historically maintained low interest rates and was the last to exit negative rates. This decision contrasts with other central banks considering rate cuts.
The Bank of England, European Central Bank, and Swiss National Bank have all slashed rates. The Fed has hinted at potential cuts in September.
A carry trade involves borrowing from low-interest nations to invest in higher-rate countries. Borrowing from Japan to invest in the US has been lucrative for years.
Bitcoin, Ethereum, and other altcoins dropped after polls showed Kamala Harris has a higher chance of beating Donald Trump. While Polymarket has Trump with a 53% chance, PredictIt favors Harris.
The ongoing geopolitical issues in the Middle East, rising US recession chances, and weak technicals also contribute to the decline.
Peter Schiff blasts Ethereum and Bitcoin ETFs
In a series of X posts, Peter Schiff, a known crypto critic and gold advocate, warned of a potential liquidity crisis for Bitcoin and Ethereum ETFs on Monday.
Schiff argues that ETFs will have to account for weekend losses and Monday’s downturn. He predicts ETF liquidations could overwhelm the spot market.
Peter Schiff has consistently criticized Bitcoin and Ethereum, deeming them worthless. Despite this, both assets have historically outperformed gold, his favored investment.
Even with the current sell-off, Bitcoin has risen by 21% this year, while gold has increased by 15%. Over the past five years, BTC has jumped 360% compared to gold’s less than 80% growth.
