Crypto Market Faces Major Downturn Amid Economic Fears

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Cryptocurrencies experienced a significant downturn, reflecting a broader risk-off sentiment in global financial markets. Over the weekend, Bitcoin (BTC) fell below the $60,000 mark, eventually plummeting to $49,300 during Monday’s Asian trading session as investors rapidly exited riskier assets. In just 24 hours, Bitcoin saw a decline of nearly 15%, although it has since made a slight recovery to around $52,000. Meanwhile, Ether (ETH) witnessed a staggering drop of 22%, hitting $2,100, marking its largest one-day decline since 2021. The altcoin-heavy CoinDesk 20 Index (CD20) suffered nearly a 20% drop, with major cryptocurrencies like Solana (SOL) and Near Protocol (NEAR) plunging between 20% and 25%. “It feels as though we’ve been struck by a perfect storm,” remarked analysts at QCP in their latest market update.

What triggered this shift in sentiment was the release of Friday’s U.S. economic data, which stoked fears of a potential recession, compounded by escalating tensions in the Middle East. The Japanese yen surged against the U.S. dollar, leading to a widespread liquidation of trades across various asset classes. This resulted in significant losses for Asian equity markets, with the Taiwanese index experiencing its worst day in 57 years. Additionally, QCP analysts noted that the crypto trading giant Jump was actively selling off assets, further aggravating the market decline.

Impact on Crypto-Related Stocks

Stocks of companies associated with cryptocurrencies declined in tandem with the falling digital asset prices. Notably, cryptocurrency exchange Coinbase (COIN) saw a drop of over 9% in pre-market trading in the U.S. MicroStrategy (MSTR), known for its policy of acquiring Bitcoin and holding more than 1% of the total supply, experienced a loss of 13%. In Sweden, CoinShares, a prominent crypto asset management firm, fell by 7.5%. U.S.-listed mining companies also faced substantial losses, with Marathon Digital (MARA) and Iren (IREN) both down nearly 14%, Hut 8 (HUT) decreasing by 12%, and Riot Platforms (RIOT) falling 11%.

Derivatives Market Wipeout

Derivatives traders encountered a dramatic leverage wipeout as prices collapsed. According to CoinGlass data, over $1 billion in liquidations were recorded within the past 24 hours across crypto-tracking futures. Specifically, Ether futures alone accounted for more than $340 million in liquidated positions, while Bitcoin futures led the losses at approximately $420 million. Additionally, futures tied to Solana (SOL), Dogecoin (DOGE), XRP (XRP), and Pepe (PEPE) experienced a cumulative liquidation of around $75 million.

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