|

Crypto carnage signals bigger trouble ahead

A full-blown crypto meltdown is unfolding as markets spiral into risk-off mode, with virtually every coin getting torched—some plunging nearly 20%. This isn't just a crypto selloff; it's a liquidity scramble as traders shed speculative assets ahead of what could be a tidal wave of margin calls and stop losses across multiple assets.

The red flags are everywhere—the crypto wipeout is casting a long shadow over global equities, suggesting retail traders are offloading profitable positions before they get steamrolled in FX or stocks. The same panic dynamic is hitting gold markets, where safe-haven demand is being overridden by cash-raising urgency.

But the real inferno is in FX, where trade surplus currencies are being obliterated, standing directly in the line of fire. This goes beyond the balance of payments fallout—we're staring at a monetary policy divergence of epic proportions.

Global central banks may be forced to cut rates, but the Fed? It’s looking at a raging inflation beast that just got a fresh dose of adrenaline. If these tariffs stick, expect the inflation dragon to roar back to life, forcing the Fed to keep the screws tight while other central banks scramble to ease.

The result? Long-term U.S. Treasury yields spike higher, further supercharging the dollar wrecking ball, which is already smashing its way across markets. Right now, we’re seeing a safe-haven dollar bid, but this is bigger than that—it’s a fundamental repricing of inflation, growth, and policy risks.

Buckle up. This is just the opening act. But the real question is, assuming this dump is simply a cash-raising exercise, where can you buy the dip in BTC and Gold?

Author

Stephen Innes

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

More from Stephen Innes
Share:

Editor's Picks

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold: Upside remains capped by $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains around the $4,370 region per troy ounce on Friday. The yellow metal’s advance finds traction in declining crude oil prices, and manages to offset the continuation of the move higher in the US Dollar and rising US Treasury yields across the curve.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.

Why Bitcoin's over 30% rebound doesn't mean the bear market cycle is done

BTC has staged a strong recovery after falling to a yearly low of $57,800 in July, gaining nearly 33% and recording two consecutive months of gains in July and August. However, despite that rebound, Bitcoin remains around 40% below its all-time high, leaving one key question for traders: is this the start of a new bullish phase, or simply another recovery within a broader bear-market cycle?

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.