Bitcoin Slumps Below $50,000 Amid Global Economic Concerns

Bitcoin (BTC) extended its slump during Asian trading hours on Monday, plunging below $50,000 before recovering to around $51,000, marking its lowest level since mid-February. Rising tensions in the Middle East and concerns about the global economy have shaken investor confidence.

The world's largest cryptocurrency fell for the fourth consecutive day, hitting a low of $49,112, according to data from TradingView. Ether (ETH), the native token of the Ethereum blockchain, also saw a significant decline, dropping to $2,060, the lowest since January 3. The CoinDesk 20 index, which tracks the most liquid non-stablecoin tokens, plunged nearly 20%.

Ether experienced a near 25% slide, its worst single-day drop since May 2021. The sell-off was triggered by rumors of crypto market maker Jump Trading liquidating assets. On-chain sleuth spotonchain identified a wallet, allegedly belonging to Jump Trading, that transferred 17,576 ETH, worth over $46 million, to centralized exchanges, signaling possible liquidation.

The crypto futures market saw over $1 billion in liquidations, with ether accounting for over $350 million in liquidated bets, an unusual occurrence.

Panic selling in bitcoin and the broader crypto market followed a wider fall in financial markets. Investors feared a global recession and escalating tensions in the Middle East. Japan's Nikkei 225 Index dropped 12.4%, the Stoxx Europe 600 Index fell more than 3%, and S&P 500 Index micro futures lost 3.3%.

The crypto fear and greed sentiment index indicated "fear," reaching its lowest level since early July. This index tracks volatility, prices, and social media data to gauge market sentiment.

Investors reacted by pulling $237.5 million from U.S. spot bitcoin exchange-traded funds (ETFs) on Friday, the largest outflow since May 1, according to SoSoValue data. Ether ETFs saw $54.3 million in net outflows. Across the broader crypto market, digital asset investments recorded $528 million in outflows last week, ending four weeks of net inflows, according to CoinShares. Bitcoin assets lost $400 million, and ether $146 million, due to concerns over a U.S. recession and geopolitical tensions.

The sudden plummet followed one of the most positive periods in bitcoin’s history. Bitcoin had rallied to a record-breaking $74,000 in March and remained close to that level until this weekend.

Other leading cryptocurrencies suffered significant losses, with Ethereum (ETH), Binance Coin (BNB), Cardano (ADA), and Solana (SOL) all falling by around 15% over the last 24 hours.

The overall crypto market fell below $2 trillion to $1.85 trillion, decreasing by 13% over the last day. Combined with losses over the previous week, bitcoin lost nearly a quarter of its value in seven days.

The latest price crash surprised many market analysts, who had expected bitcoin to rally to new all-time highs this year following a successful halving and the influx of investment from newly approved bitcoin spot ETFs.

The bitcoin halving in April, which cut mining rewards by half, typically precedes record-breaking price runs as an anti-inflationary measure.

“The cryptocurrency market has been hit by a sell-off, the likes of which haven’t been seen in a long time,” said Alex Kuptsikevich, a senior market analyst at FxPro. “We would not have been surprised to see such a sell-off before the halving due to the last takeout of buyers before the start of active growth. There is nothing unusual about such a downward amplitude in a bear market either, but not now, when the four-year cyclical pattern should work on the bulls’ side.”