Bitcoin (BTC) Price Slumps 5% as Crypto Market Retreats, But Analysts See a Bullish Retrace

worst of the crypto bloodbath has blown over, the market remains in retreat. Bitcoin’s (BTC) price is down 5% over the past week, while Ethereum’s (ETH) price has dropped by more than 15%. Altcoins followed suit, with a few exceptions: Cardano (ADA) fell 10%, Solana (SOL) 2%, Dogecoin (DOGE) 9%, Shiba Inu (SHIB) 8%, and BNB (BNB) 11%, while XRP (XRP) is up 6%.

Bitcoin’s recent sell-off has sparked a debate among analysts over its potential causes, with some attributing it to the halving and others pointing to a broader market sell-off.

According to veteran trader and crypto commentator Peter Brandt, Bitcoin’s decline since the halving is similar to that observed during the 2015-2017 halving bull market cycle.

In a recent X post, Brandt highlights the commonality between the two cycles, suggesting that the current Bitcoin price action could be influenced by the halving event.

However, some analysts disagree with Brandt's assessment. Khushboo Khullar, a partner at Lightning Ventures, argues that Bitcoin’s recent sell-off is more likely due to a broader market sell-off, triggered by the so-called carry yen trade.

According to Khullar, the crypto market dipped as a panic rush for liquidity hit the market, leading to a broad sell-off across different asset classes.

Matt Hougan, Chief Investment Officer of Bitwise Asset Management, also supports Khullar’s view.

In a recent interview with CNBC, Hougan stated that Bitcoin was simply caught in the crossfire of a broader sell-off due to the unwinding of the carry yen trade.

According to Hougan, “Nothing has changed fundamentally about Bitcoin.”

“We have a global capital market sell-off that impacted the crypto market on a low liquidity weekend, but nothing has changed fundamentally about Bitcoin or about crypto, except that we’re closer to the Fed lowering rates and closer to quantitative easing,” he added.

To understand the impact of the carry yen trade on Bitcoin, it's important to know what the yen carry trade entails.

The Bank of Japan (BOJ) has kept interest rates at or below zero for years, making it very cheap for investors to borrow the yen and use it to buy higher-yielding assets.

This strategy, known as the "yen carry trade," has been a major driver of demand for risky assets, including Bitcoin, over the past several years.

However, the BOJ's recent quarter-point hike in July made the carry trade less profitable and riskier, prompting investors to sell those assets and repay their yen loans.

This led to a broad global sell-off in stocks, commodities, and crypto, as investors liquidated their assets bought with an increasingly expensive yen.

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