Bitcoin Drops to $53K, Market Panic Erupts

As of Sunday evening US time, the sell-off in the crypto market accelerated, causing bitcoin (BTC) to fall to levels not seen since February, while eher (ETH) also fell to prices not seen since December.

Bitcoin has lost 12 percent in the last 24 hours and 20 percent on a weekly basis. Ether (ETH), which lost 21 percent in the last 24 hours and 30 percent last week, has completely erased all of its gains since the beginning of the year.

The biggest factor driving a major correction in crypto and traditional markets right now could be the Bank of Japan, which hiked its benchmark interest rate last week. The tightening financial policy has sent the yen higher and the country’s Nikkei stock index lower. After falling another 6% earlier in the day, the Nikkei is down nearly 15% in the past three sessions.

The move in Japan spilled over to the U.S., where the Nasdaq fell more than 5% in the final two sessions last week. Nasdaq futures were down 2.5% on Sunday evening.

In addition, the US Federal Reserve (Fed) surprised the market, not by keeping rates steady but by announcing in September that it was hesitant to cut interest rates.

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It is not yet clear whether the Fed made a political mistake, and markets are trying to make sense of and price in the agenda.

Looking further down the maturity curve, the U.S. 10-year Treasury yield fell to 3.75% on Sunday evening, compared with 4.25% just a week ago and is running 150-175 basis points lower than the current federal funds target of 5.25%-5.50%.