Bitcoin's major crash, what happened?

After the cryptocurrency market suffered a heavy blow over the weekend, it continued to be heavily sold off on Monday, with Bitcoin falling to nearly $54,000, a 10% drop intraday, and Ethereum dropping to nearly $2,300, a more than 13% decline.

As of last Sunday, within the past seven days, Bitcoin has cumulatively fallen by 13.1%, marking the largest decline since the bankruptcy of FTX. Other currencies such as Ethereum and Dogecoin have also followed suit in the downturn.

Media analysis indicates that this wave of selling seems to stem from a "time-triggered" algorithm program, which triggers sell orders at the same time over the past 7 trading days (every day at 10 a.m. Eastern Time, coinciding with the opening of the U.S. market). It is worth noting that this algorithm was still running over the weekend, potentially leading to a wave of high-frequency trading (HFT)-driven selling and shorting, forcing leveraged long investors to capitulate.

Data shows that the cryptocurrency "market maker" Jump Trading is liquidating positions worth hundreds of millions of dollars by selling and shorting various cryptocurrencies worth billions of dollars during the least liquid market periods, while repeatedly consuming buy orders to ensure the worst execution prices, attempting to aggressively reprice cryptocurrencies.

Since August 3, Jump Trading's cryptocurrency division, Jump Crypto, has seen an inflow of approximately $300 million in marked addresses, while the company's wallet has seen an outflow of about $80 million during the same period, flowing mainly to cryptocurrency exchanges such as Coinbase, Gate.io, and Binance, with the fund flow still ongoing.

Behind this liquidation panic, it is mainly driven by factors such as global stock market volatility and geopolitical risks, with analysis pointing out:

1. Last Friday, the U.S. stock market plummeted, the USD/JPY exchange rate collapsed, and the market expected a sharp drop in Japanese stocks after Monday's opening. Rough estimates suggest that on top of the 10% decline in the Nikkei index over the past two days, there may be an additional 6-8% downside. Following the recent major policy misstep by the Bank of Japan, Japanese stocks have entered a bear market in the past few days. This may force the Bank of Japan to restart easing and cut rates again shortly after a slight rate hike, potentially causing the Japanese economy to shrink once more.

2. Market concerns about a potential escalation of conflict between Iran and Israel, as reported by CCTV News, the Speaker of the Iranian Parliament stated on the 4th that Iran will respond strongly to the incident, and Israel and the U.S. will pay the price for the death of Haniyeh. On the same day, the Israeli Defense Minister stated that Israel is prepared to respond to attacks. Analysis suggests that every time a conflict escalates, Bitcoin experiences a sharp decline. It is expected that when the next "conflict" unfolds, a similar significant drop will occur