The global financial markets are experiencing significant turmoil, with the crypto sector being no exception. South Korea’s stock market has plunged by 4%, officially entering correction territory.
Meanwhile, Japan is facing its worst two-day drop in history, surpassing even the infamous Black Monday crash of 1987. This steep decline raises concerns about a potential larger crash in the stock market, which could further impact global financial stability, including the cryptocurrency market.
Global Financial Crisis: Market Declines and Rising Volatility
The NASDAQ is now in correction territory, and the S&P 500 is approaching it, with volatility having doubled in just a month. Many top stocks have fallen 20% from their highs. Bitcoin is enduring its worst week since the FTX collapse, and the broader crypto market is crashing. In the U.S., recession fears are mounting with the Sahm Rule being triggered, and the Federal Reserve is anticipated to cut rates three times by the end of the year.
Source: X
In Japan, the Nikkei and TOPIX indices have experienced their worst stock market losses since 1987, with both indices falling over 8% and dropping around 20% from their all-time highs set on July 11. Major trading houses like Mitsubishi, Mitsui & Co., Sumitomo, and Marubeni have all seen declines of about 10%. The market downturn followed a sharp decline on Friday, when the Nikkei and TOPIX dropped 5% and 6%, respectively. This significant drop was likely triggered by the Japanese central bank’s decision to raise interest rates and reduce government bond purchases.
In South Korea, panic selling has led to a halt on all sell orders as markets continue to crash, indicating widespread investor fear and uncertainty.
Global Financial Turmoil: Yen Weakness and Market Reactions
On Monday, the Japanese yen fell to its lowest level against the US dollar since January 2024, reaching 142.77. According to Kelvin Tay from UBS Global Wealth Management, the previous strength in Japanese stocks was partly due to a weaker yen. As the yen reverses its course, investors are swiftly exiting the market.
Warren Buffett’s decision to sell more stocks last quarter than ever before indicates growing concerns about the market’s direction. Additionally, the recent surge in crypto prices attracted many new investors, but with the market now reversing, these positions are being liquidated, exacerbating the downward momentum.
The US market may have played a role in Japan’s current financial situation. Uncertainty surrounding the Federal Reserve’s potential interest rate cuts in September has caused investor panic and contributed to the selloff. Japanese Central Bank governor Kazuo Ueda mentioned that if the economy and prices align with projections, interest rates will continue to rise.
Bitcoin has dropped 17% to $50,350 from its high of $70,000, leading to a $1.04 billion loss in the crypto market within 24 hours. This decline includes significant losses from both bullish and bearish investors. Trading below its 200-day moving average, Bitcoin faces the risk of further declines, and altcoins may experience even greater drops. The interconnected global financial markets are fueling this volatility, creating notable instability as investors and analysts await signs of stabilization.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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