Tide Capital: Market Flash Crash Ends, BTC Poised for Recovery

With
the
unwinding
of
yen
carry
trades,
the
global
market
flash
crash
has
concluded.
Tide
Capital
anticipates
a
gradual
bottoming
out
and
recovery
of
the
market.
Although
BTC
shows
potential
for
upward
movement,
uncertainty
surrounding
the
U.S.
election
might
initially
affect
prices
before
a
final
upswing.

Global
market
flash
crash
ends
and
recovery
begins

The
recent
turbulence
in
global
markets
was
triggered
by
a
sharp
drop
in
Japanese
stocks
on
August
5,
causing
a
global
sell-off
and
increased
volatility.
However,
in
the
following
four
trading
days,
global
indices
rebounded,
effectively
recovering
the
early-week
losses.
Concerns
that
the
unwinding
of
large
yen
carry
trade
positions
might
spark
a
liquidity
crisis
similar
to
that
of
March
2020
have
eased.
Tide
Capital
reports
that
these
liquidity
fears
have
dissipated,
with
market
volatility
significantly
reduced.

The
impact
of
unwinding
crowded
trades
appears
to
be
over.
This
volatility
stemmed
largely
from
the
reversal
of
high-leverage
strategies,
including
shorting
the
yen
and
going
long
on
equities.
High-leverage
funds
have
rapidly
reduced
their
short
positions
in
yen
to
a
yearly
low,
signaling
that
the
unwinding
phase
is
nearing
completion.

Additionally,
liquidity
risks
have
not
worsened.
Indicators
such
as
the
yen-dollar
currency
swap
basis
remain
stable,
while
assets
like
gold
and
U.S.
Treasuries
have
shown
no
significant
distress.
The
VIX
index,
which
spiked
to
65,
has
since
retreated
to
around
15,
reflecting
a
calming
of
market
panic.

Crypto
market
completes
deep
correction,
likely
to
rise
gradually

This
downturn
in
the
crypto
market
was
largely
driven
by
global
de-leveraging
rather
than
intrinsic
issues
within
the
crypto
space.
According
to
Tide
Capital,
the
rapid
de-leveraging
process
is
nearing
completion,
with
futures
data
showing
a
decrease
in
BTC
open
interest
from
$37.5
billion
to
$30.0
billion.
The
reduction
in
leveraged
long
positions
has
facilitated
a
healthy
market
adjustment.

Stablecoins
have
seen
a
net
inflow,
increasing
from
$171.2
billion
to
$173.6
billion
over
the
past
month.
Institutional
investors
have
been
buying
at
lower
levels,
with
notable
market
maker
Cumberland
acquiring
over
1.5
billion
USDT
from
Tether
Treasury
and
transferring
them
to
major
exchanges.
With
anticipated
interest
rate
cuts
in
September,
the
market
expects
funding
costs
to
decline,
further
driving
investment
into
cryptocurrencies.

U.S.
election
uncertainty
may
cause
market
to
decline
first
and
rise
later

The
upcoming
U.S.
presidential
election
remains
a
key
factor
for
market
sentiment.
Polymarket
data
shows
Kamala
Harris
has
a
51%
chance
of
winning,
with
Donald
Trump
also
remaining
a
strong
contender.
The
election’s
uncertainty
is
likely
to
influence
market
trends
in
the
coming
months.

Historically,
markets
dislike
uncertainty,
often
declining
before
an
election.
After
the
election
results
are
out,
markets
typically
recover
and
rise.
For
example,
in
2020,
both
U.S.
stocks
and
BTC
began
to
decline
in
September.
It
was
only
after
the
November
election
results
were
settled
that
markets
surged,
with
BTC
and
U.S.
stocks
reaching
new
all-time
highs.

Tide
Capital
anticipates
a
similar
pattern
this
year,
with
the
market
potentially
declining
before
recovering
as
the
election
results
become
clear.
Regardless
of
whether
Harris
or
Trump
is
elected,
continued
money
printing
policies
are
expected
to
drive
both
U.S.
stocks
and
the
crypto
market
higher.

Tide
Capital

Tide
Capital
is
a
research-driven
digital
asset
investment
and
trading
firm.
We
study
macro
and
fundamentals
to
capture
beta
and
alpha
opportunities
from
crypto
waves
to
financial
tides.
Driven
by
value,
we
aim
to
invest
in
early-stage
projects
with
significant
growth
potential.
Concurrently,
we
assess
market
cycles
to
inform
our
investment
decisions,
trading
in
the
public
market
to
achieve
returns.

Disclaimer

The
information
provided
in
this
release
is
based
on
publicly
available
sources.
Tide
Capital
makes
no
guarantees
regarding
its
accuracy
or
completeness.
Predictions
and
opinions
are
subject
to
change
and
may
differ
significantly
from
actual
results.
This
content
is
for
informational
purposes
only
and
does
not
constitute
investment
advice.
Investors
should
seek
their
own
legal
and
financial
advice
before
makin