The global financial turbulence has triggered a big dump of BTC by 20%, with the crypto market being deeply connected to TradFi.

Recently, the global financial market has faced multiple shocks, with turmoil rapidly spreading to the crypto market, leading to a collective big dump of digital assets. This wave of volatility that began in the TradFi market ultimately transmitted to the cryptocurrency market, highlighting the increasingly close relationship between virtual currencies and the traditional financial system.

The source of the event can be traced back to the unexpected actions of the Bank of Japan—its sudden announcement of interest rate hikes and the contraction of its balance sheet disrupted the balance of global arbitrage trading, triggering a chain reaction. The yen exchange rate subsequently soared, forcing global investors to liquidate positions on a large scale, selling stocks and various assets to repay yen-denominated debts. This change severely impacted the US stock market, leading to a significant fall in stock indices; at the same time, the US economy is also shrouded in the shadow of recession, with the latest employment data falling far short of expectations, and the unemployment rate rising to 4.3%, deepening market concerns about the economic outlook; the lackluster earnings reports of tech giants further dampened investor confidence.

Driven by global risk-averse sentiment, the crypto market has not been immune. As a representative of high-risk assets, BTC was hit hard, experiencing a big dump of over 20% in a short time, briefly falling below $50,000; other major encryption currencies like Ethereum also saw significant declines, leading to a bleak market.

Analysts point out that this recent big dump of cryptocurrencies fully confirms the deep binding of the digital asset market with the TradFi market—despite encryption being often touted as a tool for hedging against inflation and traditional financial risks, it still struggles to stand alone amid global liquidity tightening and risk aversion sentiment. Coupled with the ongoing pressure from U.S. regulatory agencies on the encryption industry, the intertwining of regulatory uncertainty and global macroeconomic turmoil further amplifies the market sell-off, making the close connection between the two markets increasingly clear.

For investors, this is both a severe test and an important warning: when making investment decisions, it is essential to fully consider the interconnectedness of the global economy— including the linkage between the TradFi market and the emerging encryption asset market. In an environment full of uncertainty, remaining vigilant and flexibly adjusting strategies is key to managing risks.

In the future, the market will continue to pay attention to the policy direction of various central banks, the global economic recovery situation, and the regulatory dynamics of cryptocurrencies. This financial storm spanning traditional and emerging markets may redefine the global asset allocation pattern, and investors need to view market changes from a more comprehensive and cautious perspective.
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