Bitcoin Plunges Below $50,000 Amid Middle East Tensions and Economic Worries

Bitcoin plunged to a multi-month low early Monday before recovering, as rising tensions in the Middle East and concerns about a slowing U.S. economy rattled investors worldwide. The fall in crypto markets came in lock-step with the rout in equity markets across the globe.

BTC dipped below $50,000 before recovering to nearly $50,175.45 on Monday as of 8.36 am EST. Ether, too, plunged to multi-month lows; the coin has lost more than a fifth of its value in the last 24 hours. Almost all our coins were in the red as digital currencies experienced their worst day since the FTX collapse that shook crypto markets in 2022.

The Fear and Greed index that indicates market sentiment was hovering around 31, indicating a market gripped by fear.

Geopolitical Tensions and Economic Pressures

The U.S. stock market has fallen last few trading sessions, while the Japanese stock market has hit circuit-breaker for two consecutive trading days. The panic index VXX soared 27% in a single day, indicating the macro-financial market is under great pressure for correction, triggering a wider selloff.

Talking to The Shib Daily, Gracy Chen, CEO at Bitget, said the global markets are taking cue from geopolitical tensions and the recession pressure facing the U.S. economy.

“The emotional impact of large institutions’ market actions also plays a role, with Berkshire Hathaway’s cash pile surging after selling Apple and Bank of America stocks in the past 12 trading days,” Chen said. “Warren Buffett sold stocks and now holds cash in large quantities, affecting the overall sentiment of the market. On the crypto front, Jump Crypto, a leading market maker in the crypto market, sold ETH, causing the price to fall sharply after analysts bet downfall post ETF approvals.”

Prospects for Recovery

Chen says that judging from historical trends in the crypto market, before the market forms turn bullish, it needs to experience a sharp decline to reduce the long positions in order to reduce the selling pressure for future rises. “This is a key factor in the rapid rise of the market. Observers can continue to pay attention to changes in the macro market including the panic index indicators” she said. At present, the market trend is mostly affected by the sentiment index, she added. “If VXX starts to fall, it means that the panic sentiment has eased.”

Shivam Thakral, CEO of BuyUcoin, told The Shib Daily that the global crypto market has witnessed a significant shift, with a market cap of $1.89 trillion reflecting a 12.29% decrease over the last day. Bitcoin’s “dominance has slightly increased to 56.56%, indicating resilience amid the market volatility,” he said.

“Bitcoin’s strong market presence reflects that there is potential for recovery and growth as market conditions stabilize,” he added.

Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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