In a recent report, Ryze Labs pointed to the ongoing tax season as a factor likely to contribute to sustained market weakness beyond the current decline.
Cryptocurrencies experienced a significant downturn on Friday, mirroring the risk-off sentiment prevailing in traditional markets, which intensified amidst heightened geopolitical tensions. During the afternoon trading session in the United States, Bitcoin (BTC) plunged below the $66,000 mark, having previously tested the $71,000 threshold just hours earlier. As of the latest update, Bitcoin had managed a slight recovery to $66,700, marking a decline of over 5% within the past 24 hours.
Ether (ETH), the second-largest cryptocurrency by market capitalization, also faced substantial losses, dropping by as much as 12% to $3,100 before a modest rebound trimmed the decline to 8%.
The broader cryptocurrency market witnessed even more pronounced losses during the panicky trading activity. Overall, the market experienced a nearly 10% decline, with prominent altcoins such as Cardano’s ADA, Avalanche’s AVAX, Bitcoin Cash (BCH), Filecoin (FIL), and Aptos (APT) all plummeting by 15-20%.
The sharp drawdown triggered the largest leverage washout in a month, resulting in the liquidation of approximately $850 million worth of leveraged derivatives trading positions across various digital assets. Of these positions, around $770 million were long positions, representing traders who were betting on rising prices and were caught off-guard by the sudden downturn.
The decline coincided with a drop in stock markets during the U.S. trading session, driven by mounting concerns over escalating tensions in the Middle East. U.S. authorities issued warnings indicating that Iran might be preparing to launch a significant attack on Israel. Consequently, investors sought refuge in Treasury bonds and the U.S. dollar index (DXY), while key U.S. equity indices such as the S&P 500 and Nasdaq 100 experienced declines of 1.7% just an hour before the trading session concluded. Meanwhile, gold, a traditional safe-haven asset, surged past $2,400 to reach a new all-time high before retracing some of its gains, while oil registered a modest 1% increase.
In light of the market conditions, Ryze Labs, a digital asset investment firm formerly known as Sino Global Capital, provided commentary on Friday, suggesting that investors brace for short-term market softness in the crypto space due to the impending tax season. However, the firm maintained a more optimistic long-term outlook, anticipating relief for the asset class as policymakers may ease quantitative tightening measures and potentially adjust monetary policies to facilitate U.S. government debt rollovers.
