From August 4 to August 5, 2024, the crypto market experienced a significant drawdown. Experts believe this may be due to brokerage firm Jump Trading liquidating its portfolio.
This opinion was expressed, in particular, by the managing partner of the CEHV fund, Adam Cochran:
“Jump Trading's sale of its crypto assets on the thin markets on a summer Sunday perfectly reflects why they are such a mess in their operations in this segment. It is incredible that tranches from a company that supported so many projects in this industry turned into a disaster.”
In a comment to Incrypted, the head of Matrixport ecosystem development, Benjamin Stani, stated the following:
“In my opinion, one should be guided by macroeconomic factors, which was the impetus for the wave of liquidations. […] There are also rumors that one of the largest cryptocurrency market makers is winding down its activities, people are monitoring the movement of its on-chain assets and the sale of Ethereum. Overall, markets are in a holding pattern.”
Stani included a weak trading session in the United States, an 8% drop in Asian indices, and general market conditions as macroeconomic factors.
Pavel Savich, head of research for delta.theta and YieldFort projects, partially agrees with this. In a comment to Incrypted he stated the following:
“We believe that the collapse is associated with panic selling caused by a decline in global stock markets (in particular Japanese and American). At this time there is no indication that the sales are of an insider nature on geopolitics.”
He also noted that in the case of the crypto market, one can see the influence of several other factors that overlapped each other. This is the “exit” of Jump Trading from the market and the launch of spot Ethereum-ETFs, which is why a large volume of arbitrage funds was generated for sale.
Savich believes that the recovery of the crypto market will begin in the second half of August-early September 2024.
The opinion that the drawdown was due to the actions of Jump Trading was supported by Julian Hosp, CEO of Cake Group. He believes that the liquidation of the portfolio by the company is dictated by one of two reasons - a sharp need for liquidity or an attempt by Jump Trading to completely leave the cryptosphere amid possible regulatory problems.
He also noted that the company appears to be continuing to sell assets from the portfolio.
This is confirmed by data from Spot On Chain experts. In the last 24 hours alone, Jump Trading has brought almost $47 million worth of Ethereum to centralized crypto exchanges. According to the Arkham Intelligence platform, the firm has sold hundreds of millions of various crypto assets in recent days.
The situation was aggravated by the fact that there was no one to balance the pressure from sellers. This was noted by blogger Anthony Pompliano. Since the stock market was closed, ETF providers were unable to redeem crypto assets.
