The recent crypto market crash is being directly linked to significant offloading by Jump Trading, according to a report by QCP Group, one of Singapore’s prominent digital asset trading groups.
Ether (ETH) experienced a steep decline, falling over 21% within 24 hours to trade at $2,252, marking a significant drop to an over five-month low.
This sharp decline, noted at 11:20 a.m. UTC, was primarily attributed to aggressive selling by Jump Trading and Paradigm VC. QCP Group stated in an August 5 report:
“The immediate trigger in crypto seems to have been aggressive ETH selling from Jump Trading and Paradigm VC. The move was probably exacerbated by market makers scrambling to cut short gamma as front-end ETH volumes spiked more than 30% to 120%!”
Ether’s price is now struggling to stay above the crucial $2,200 psychological mark. A dip below this level could potentially lead to panic selling among investors, further driving down prices.
Jump Trading’s Selling Activity
Over the past week, Jump Crypto, the crypto division of Jump Trading, has transferred hundreds of millions of dollars worth of digital assets to exchanges in preparation for a substantial sale. Since July 24, Jump Trading has sold over $377 million worth of Lido’s wrapped staked Ether (wstETH).
The firm plans to sell a total of $481 million worth of wstETH. According to an August 5 post by Lookonchain:
“Jump Trading is selling 120,695 wstETH ($481M) and has sold 83K $wstETH ($377M) since July 24, leaving 37,604 $wstETH ($104M). The market also began to fall after July 24, falling by more than 33%!”
Regulatory Scrutiny
Jump Trading is reportedly under investigation by the Commodities and Futures Trading Commission (CFTC). This scrutiny has led to the resignation of the firm’s president, Kanav Kariya, who stepped down from his role on June 24.
Macroeconomic factors have also contributed to the recent downturn in the crypto market. Poor U.S. unemployment data released on Friday acted as a significant negative catalyst. QCP Group noted:
“In addition to that, huge unwinds across all assets have caused volatility to spike sharply. The VIX touched 50 (it was only higher during the Covid panic and the 2008 financial crisis), and USDJPY 1M at-the-money Vols spiked to 16%! This is likely to cause further unwinds.”
Geopolitical Tensions
Current geopolitical tensions, particularly between Israel and Iran, have added further downward pressure on global markets. According to QCP Group:
“A global risk-off mood has also set in with Israel killing the Hamas leader over the weekend. Iran has vowed to take action, and the US has actually started to deploy troops into the Middle East.”
