US Stock Market Circuit Breaker Sparks Tremors in Crypto Market: How Investors Should Navigate New Challenges

Impact of US Stock Market Circuit Breaker on the Crypto Market

Recently, the US stock market triggered a circuit breaker due to weak economic data and policy uncertainty, causing all three major indices to fall sharply. This volatility quickly spread to the crypto market, with Bitcoin dropping by 15.2% and Ethereum falling by more than 21.7%, while other cryptocurrencies also experienced double-digit declines.

Investor Confidence Hit

The simultaneous decline in the US stock and crypto markets has intensified investor panic. According to Coinglass, in the past 24 hours, over 269,000 liquidations occurred across the network, with a total liquidation value of $1.02 billion. Nearly 90% of the liquidations were long positions, totaling about $892 million. 

Investment Strategy Adjustment Suggestions

1. Long-Term Investors

The current market volatility presents an opportunity for long-term investors to acquire quality assets at a lower price. It is advisable to focus on blockchain projects with growth potential, such as underlying public chains, DeFi projects, and NFTs, but with caution in assessing project risks and value.

2. Short-Term Investors

Short-term investors should reduce their equity positions and increase cash or stablecoin allocations to mitigate risks. Additionally, they can engage in arbitrage trading based on crypto volatility, but risk control is crucial.

3. Diversified Investment

The diversified investment strategy remains important. Investors can expand their portfolios to include blockchain assets, but should ensure proper risk dispersion to avoid excessive concentration.

Stay Updated on Regulatory Developments

Cryptocurrency regulation worldwide is intensifying. For example, Hong Kong has added four new virtual asset trading platforms, increasing the total number of licensed crypto exchanges to seven. Investors are advised to stay to regulatory changes and ensure compliance with legal frameworks.