Crypto liquidation triggers global alarm and pressures Wall Street

Source: Exame Original Title: Crypto liquidation triggers global alarm and pressures Wall Street Original Link: Bitcoin fell by up to 2.8% this Tuesday, breaking the $90,000 mark for the first time in seven months. The sell-off intensified the risk aversion movement in Asian markets and threatens to trigger a new cycle of selling on Wall Street.

The MSCI Asia Pacific index fell more than 2%, marking its worst performance in a month. Most Asian stock markets recorded losses in the morning, particularly in Japan: the Nikkei 225 index dropped 3.2%, pressured by fiscal and diplomatic tensions.

There was a flight to safe assets: the yields on 10-year U.S. Treasury bonds fell by four basis points, while the yen and the Swiss franc appreciated. The risk-sensitive Australian dollar depreciated.

Analysts point out that the collapse of bitcoin may exacerbate forced sales by leveraged investors. “We may see more downward pressure as wallets are adjusted to cover losses in stocks,” said Nick Twidale of AT Global Markets.

With the market monitoring the pace of interest rate cuts in the US and awaiting important corporate earnings, the tone was already one of caution. “The prolonged drop in bitcoin reinforces the perception that something deeper is changing,” said Hebe Chen from Vantage Markets.

Pressure spreads to the US and Europe

On the morning of this Tuesday, S&P 500 futures were down 0.4%, indicating the fourth consecutive session of losses, the longest since August. Nasdaq 100 contracts also recorded a decline of 0.4%. In Europe, futures indices opened lower, following the negative global sentiment.

“If bitcoin serves as a thermometer for market sentiment, it is signaling a level of fear typical of a bear market,” said Anna Wu of Van Eck.

The combination of uncertainties regarding the Fed's interest rate cuts, concerns about the overvaluation of artificial intelligence stocks, and the sell-off in cryptocurrencies has led investors to increase defensive positions.

Analysts assess that the appetite for AI is under pressure. “Some of the more optimistic bets — enthusiasm for AI, massive fiscal stimulus, dovish expectations for the Fed — are starting to weaken,” stated a specialist from Swissquote.