With the Bitcoin price crash over the weekend, the prices of other cryptocurrencies such as Shiba Inu have followed sharply. The result of this has been a double-digit price crash for Shiba Inu, alongside other altcoins. Naturally, the rapid decline has raised questions, with industry stakeholders wondering what is driving this massive crash.
Shiba Inu Price Crash Is Following Bitcoin
The Shiba Inu price crash being experienced today is not a result of a single event occurring for the meme coin. Rather, it is linked to a further market-wide crash that began with the Bitcoin price first falling below $60,000 and eventually breaking $50,000 on Monday. Therefore, to get the real reason behind the Shiba Inu price crash, we must look at the reason driving the Bitcoin crash.
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So far, Bitcoin, and the broader crypto market, has been responding to major events happening around the world. These are outline by pro trader Adam Khoo in an X (formerly Twitter) post, revealing a much deeper reason for the decline.
One of these major events is the decline in the Japanese stock market, which is seeing its largest single-day decline since 1987. As Khoo outlined, traders on the Japanese stock exchange had borrowed the Japanese Yen at low interest rates to convert to United States Dollar, which is, in turn, used to buy US stocks for a larger gain.
This strategy has worked for the trader as Yen’s interest rates remained low. However, the Japanese government raised interest rates, meaning that these traders were now dealing with massive losses as the Yen strengthened against the US dollar.
The result of this is a large sell-off as traders scramble to pay back their loans while taking huge losses in the process. Naturally, this led to a decline in US stocks and the likes of Bitcoin and Shiba Inu have been reacting to this market decline.
The sharp rise in the JPY/USD is causing a massive unwind of Yen carry trade positions and contributing to the sharp decline in US stocks. For those who do not understand how this works, a brief explanation
1) Many traders were borrowing Jap Yen (JPY) at low interest rates,… pic.twitter.com/sfi0Hva56M
— Adam Khoo (@adamkhootrader) August 5, 2024
Not only this, other major events such as war escalation in the Middle East, as well as the US presidential elections having no clear winner yet, has driven prices down further. With fear and panic spreading, more investors are selling, causing an already deep decline to depend further.
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However, while investors in assets such as Shiba Inu panic, the crypto trader does not believe that it is all bad. According to him, this is a great time to “take advantage of temporary mis-pricing caused by short term crisis.”
Presently, the Shiba Inu price is sitting at $0.00001111 – its lowest level in six months. Going by the trader’s sentiment, this could be a good time to get into coins such as Shiba Inu, as a rebound from here could lead to new all-time highs.
Featured image created with Dall.E, chart from Tradingview.com