The Sunday night futures market had the most volatile start in years, with bitcoin on the CME futures exchange opening with a gap down of over -6% from Friday’s close at $61,000.

After opening just under $59,000, the price continued to slide throughout the night and into Monday morning, ultimately bottoming out at $49,800 right before the NYSE open. This marked an incredible 21.5% decrease in about half a trading session.

The fall below $50k marked over a 33% decline from the $74,000 top earlier in March, putting bitcoin solidly into bear market correction territory to start the week.

Liquidations Surpass The $1 Billion Mark

Leveraged traders suffered more than $1 billion in liquidations across futures exchanges, with over $800 million in longs being wiped out. Short positions weren’t spared either, as panic short-sellers were liquidated to the tune of nearly $300 million after the eventual recovery bounce later on Monday.

Fear and Greed Index Falls To “Extreme Fear Levels”

The crypto fear & greed index fell to a low reading of 17, the lowest level since the collapse of the FTX exchange back in November 2022. Historically, extreme fear reads tend to mark local bottoms in bitcoin’s price action, and this was the case again, with bitcoin rebounding sharply following the NYSE open.

By the end of the day on Monday, the price had rebounded about $6,000 to just short of $56,000. It continued to climb throughout the week, with bitcoin reclaiming the $60,000 zone by Friday, closing at $61,000 — a gain of over $11,000 or 23.5% from the low to the closing price. The week saw a staggering $24,000 intra-week range from high to low and back, ending with bitcoin bulls rallying to just a -3% decline after an emotional rollercoaster of a week.

Impact of Yen “Carry-Trade” on Bitcoin

The unwinding of the Japanese yen carry trade likely played a pivotal role in the recent sell-off in bitcoin and other crypto assets. A carry trade involves borrowing in a currency with low interest rates, like the yen, and investing in higher-yielding assets such as equities or cryptocurrencies. Japan’s ultra-low interest rates made the yen a popular currency for such trades, driving significant capital into riskier markets.

However, when Japan’s central bank unexpectedly raised interest rates by 0.25%, the yen appreciated sharply against other currencies, making these trades less profitable. Investors were forced to unwind their positions, leading to a widespread liquidation of risk assets, including bitcoin.

The simultaneous sell-off in global equity markets, particularly in Japan, where the Nikkei 225 plunged 12.4% in one day, added to the downward pressure on bitcoin and the broader crypto market.

ETF Flows Downtick

Spot ETF flows saw their second consecutive week of negative movements, with over $169 million in net outflows. Monday saw the largest outflows since April, with over $237 million exiting the space. Grayscale’s GBTC fund experienced the highest amount of outflows, with $183 million in redemptions on Friday.

However, after bitcoin’s impressive 12% rally on Thursday, the market saw some capital flow back into the space, with over $192 million in net inflows. BlackRock’s IBIT fund saw the largest allocation, taking in over $157 million, bringing its total bitcoin holdings to over 347,607 BTC, the most of any ETF issuer.

Bitcoin Dominance Continues Higher

Bitcoin’s market share of the total crypto market cap shot up another 1% this week, with bitcoin now making up over 57.55% of the $2.086 trillion market. The dominance metric has been in a steady uptrend for over a year, and the last couple of weeks have highlighted bitcoin’s utility as a store of value relative to other crypto assets during periods of market uncertainty and fear.

According to Coinglass data, August has historically seen a median return for bitcoin of -6.83% since 2013. With bitcoin down -6% for the month already, it’s more probable that bitcoin will hover around the $60,000 mark for the next few weeks, maintaining its range-bound price action since March.

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