The Bitcoin and crypto markets are currently experiencing one of the worst days since the FTX crash in November 2022. On Binance, the Bitcoin price plummeted to as low as $49,000, marking a stark 15% crash over the past 24 hours. Similarly, Ethereum has tumbled by 20.4%, Binance Coin (BNB) by 20.0%, Solana (SOL) by 18.4%, and XRP by 17.4%.

Crypto Market Crash Is Less Dire

However, macro and crypto analyst Alex Krüger believes that the circumstances could be even worse. Krüger’s analysis attributes the severity of the crash not to internal crypto market factors but to broader macroeconomic policies, particularly highlighting the contrasting monetary policies of the US Federal Reserve and the Bank of Japan.

“This debacle is obviously macro driven, rather than crypto specific. And it is becoming apparent the main driver is not the US economy collapsing (recession talks spiked post payrolls last Friday). It seems the policy mistake was not the Fed not cutting fast enough, but rather the Fed not cutting while Japan hiked. This is hindsight obviously, and we now need US economic data to confirm this,” Krüger articulated.

He pointed out the correlation between the market sell-off and specific global financial events, “Chart shows where the sell-off started last week. On Wednesday right after the FOMC. Exactly when the Nikkei opens.” Krüger further detailed why the situation could be worse. On the nature of the financial crisis, he remarked, “A financial crisis mainly driven by a cascade of levered Japanese speculators is a much better alternative than a financial crisis driven by the US entering into recession.”

Krüger also underscored the critical nature of upcoming US economic data releases, especially job market indicators. “When it comes to US data, the focus is now on the job market, so pay particular attention to initial jobless claims this Thursday (not generally market moving data), as well as the State Employment data (providing detailed state-level employment data, something markets rarely pay much attention to), to be released on Aug/16.”

The analyst noted that the situation could be even more severe, attributing the relatively contained fallout to the fact that the macroeconomic downturn was not triggered by a hard landing scenario. He stated: “BTW this is not about sugarcoating. What is lost is lost. Charts are REKT. But we really do not want to go into a hard landing scenario. I still don’t see it in the data.”

Adding to the discourse, prominent crypto trader on X, Daan Crypto Trades (@DaanCrypto), shared his perspective on potential market recovery dynamics reminiscent of past market corrections. “It will be interesting to see how well the 2020 muscle memory is embedded into the average market participant. Buying the Covid crash blood when stimulus started was possibly one of the best trades in the past decade. In all markets.”

However, as Daan emphasizes, there is no guarantee that history will repeat itself. “Wondering if knowing this, market participants are more willing to front run this, seeing how well it turned out just 4 years ago. Not saying this is the play, just something I’m curious to see playing out. Let’s first see if Central banks are willing to step in soon.”

At press time, BTC traded at $51,927.