Crypto Apocalypse? Why Bitcoin, Ethereum, and Crypto Collapsed
The crypto market started to melt down at about 8 p.m. ET on Sunday and has yet to recover. As of 11:30 a.m. ET on Monday, Bitcoin (CRYPTO: BTC) is down 8.3% in the last 24 hours, Ethereum (CRYPTO: ETH) is down 14.7%, and Dogecoin (CRYPTO: DOGE) is off 9.1%. The two most popular crypto exchange-traded funds (ETFs) are also down. The iShares Bitcoin is off 12.6% and the Grayscale Ethereum Trust down 19.2%. Both are compared to their closing price on Friday.
What drove the rapid sell-off was leverage. This time, it wasn't just leverage in crypto, it was the yen carry trade that sparked the market.
Over the past day, a popular trade known as the yen carry trade has started to unwind. The trade involves borrowing yen, which has had an interest rate near zero since before the financial crisis in 2008, and converting it to a currency like the U.S. dollar to buy higher-yield assets.
Source Fool.com
