On Sunday, August 4th, futures opened with a violent downturn. Bitcoin, along with other major indices, plummeted. The selloff was particularly severe in Japan, where the Nikkei 225 fell over 12%, marking its worst single-day decline since 1987.

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Global stock markets experienced significant downturns, with major U.S. indices, including the Dow Jones, S&P 500, and Nasdaq, dropping more than 4% in early trading.

Market volatility, driven by fears of a slowing U.S. economy and concerns over the Federal Reserve’s response, further fueled widespread selling of megacap tech stocks. The VIX - a measure of market fear - saw its largest intraday percentage gain since COVID started and Level 2 investors earned 100% returns from their VIX positions heading into the week. Although some blamed recession indicators for the sharp decline in equity prices, the correlation between the market pullback and the Japanese Yen was more evident.

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Weak labor market data and uneven corporate earnings further contributed to the selloff. Additionally, U.S. job growth slowed for the third month, and the unemployment rate rose to 4.3%.