Bitcoin Dips Below $50K as Investors Flee Risk Assets

Ether recorded its biggest single-day drop since May 2021.

The crypto fear and greed index spread “fear” and fell to its lowest level in a month.

The CoinDesk 20 Index is down nearly 20%.

Bitcoin {{BTC}} continued to slide during Asian trading hours on Monday, falling below $50,000 before recovering to near $53,000, its lowest level since mid-February. This came as rising tensions in the Middle East and concerns about the strength of the global economy eroded investor confidence.

The world’s largest cryptocurrency fell for a fourth straight day, falling to $49,112, according to TradingView data. Ether {{ETH}}, the native token of the Ethereum blockchain, fell to $2,060, its lowest level since Jan. 3. The CoinDesk 20 index, which tracks some of the most illiquid and unstable tokens, fell nearly 20%.

Ether’s nearly 25% drop is the worst single-day drop for the token since May 2021. The sell-off in Ether was fueled by rumors that crypto market maker Jump Trading was liquidating its holdings. On-chain detective spotonchain has identified a wallet allegedly belonging to Jump Trading that transferred 17,576 ETH worth more than $46 million to centralized exchanges, signaling a possible liquidation.

The bloodbath led to over $1 billion in liquidations in the crypto futures market, while over $350 million in liquidated bets were recorded in ether, a rare occurrence.

The panic selling in Bitcoin and the broader cryptocurrency market was triggered by a broader decline in financial markets, with fears of a global recession and rising tensions in the Middle East sending investors into panic mode. Japan’s Nikkei 225 Index fell 12.4%, the Stoxx Europe 600 Index fell 2.8% and micro futures on the S&P 500 Index lost 2.9%.

This led the crypto fear and greed sentiment index to spread “fear” and hit its lowest level since early July. The index tracks volatility, prices, and social media data to indicate whether participants are fearful (usually a sign of local bottoms) or greedy (a sign of market tops).

Read more: Crypto Futures Set $1 Billion Liquidation Record as Bitcoin Drops, Ether Posts Biggest Drop Since 2021

UPDATE (August 5, 07:09 UTC): Added additional details about market sales and liquidations.

UPDATE (August 5, 07:25 UTC): Updated prices; added stock market indices in penultimate paragraph.

UPDATE (August 5, 08:00 UTC): Title and first paragraph updated with latest price.