The global crypto market fell sharply on Thursday as fresh geopolitical and macroeconomic concerns dampened investors’ appetite for risk assets.
Summary
Crypto markets fell sharply as rising tensions in the Middle East and warmer US PPI data dampened investor appetite, pushing Bitcoin down nearly 5% to around $70,600. Global markets fell along with crypto, with stocks and precious metals falling while oil rose to record highs amid disruptions to key energy supply routes. More than $480 million in long positions were liquidated across crypto markets, intensifying downward pressure as interest rate cut expectations faded after Powell’s comments.
Bitcoin (BTC), the bellwether asset, fell nearly 5% to $70,600 on Thursday, down from the $74,000 levels seen the previous day. Ethereum (ETH) fell 6% to $2,187, while $XRP ($XRP), $BNB ($BNB), Solana (SOL) and Dogecoin (DOGE) experienced losses ranging between 3% and 6%.
Zcash (ZEC), Worldcoin (WLD) and LayerZero (ZRO) suffered some of the biggest losses amid the market-wide decline that brought the total crypto market cap to $2.51 trillion.
Crypto prices fell sharply shortly after Israel launched an unprecedented cyber and drone attack on Iran’s largest gas facility, South Pars. According to reports, the massive complex powers nearly 70% of the country’s domestic gas reserves, the loss of which threatened the country’s power grid.
The strike comes amid an escalating energy war between the US, Israel and Iran, which has led to a blockade at the Strait of Hormuz, a key waterway for global oil transport, and sent crude and gas prices to record highs. Iran had earlier promised to push oil prices up to as high as $200.
The latest attack not only rocked the crypto market, but also rippled across traditional finance. Notably, Gold fell 2.1% on the day, raising investor doubts about its safe-haven status, while Silver fell 3.5%. Together, these precious metals wiped nearly $150 billion off the market.
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Traditional stock indexes around the world also fell along with risk assets. In particular, Asian benchmarks such as Japan’s Nikkei 225 and the Hang Seng fell by more than 2%. Even US indices such as the Dow Jones Industrial Average, Nasdaq 100, S&P 500 and Russell 2000 index all fell sharply across the board.
However, oil prices took a different path and rose to new levels. Notably, Brent Crude rose 3% to a new record high of $112 on Thursday as traders priced in a prolonged disruption in a region that remains a key source of global energy production.
Typically, when gold and cryptocurrency prices crash, it means traders are fleeing to cash rather than rotating between alternative assets.
Warmer US PPI data and Fed announcement deliver a double whammy for bulls
Fears of sticky inflation also played a big role in the crypto market decline today. The US revealed on Wednesday that the PPI data came in much hotter than expected, with a record monthly gain in a year for wholesale costs. This came as the market was already cautious ahead of the Federal Reserve’s rate decision scheduled for later in the day.
In his speech, Fed Chairman Jerome Powell echoed concerns about elevated inflation levels. Powell explained that the Federal Reserve is willing to keep interest rates steady as it sticks to a target=”_blank” rel=”nofollow”>Data from CoinGlass shows that more than $481 million in long positions were liquidated in the past 24 hours, with Bitcoin and Ethereum accounting for the majority of that, with $143 million and $127 million in long liquidations, respectively.
Long liquidations occur when investors bet on a price increase, and the asset price falls enough to reach their margin limits, forcing the exchange to automatically close their trades.
Read more: Trump waives Jones Act as oil tops $100 and crypto drops on inflation fears
Disclosure: This article does not represent investment advice. The content and materials on this page are for educational purposes only.
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