Bitcoin slumps under $50K, losing 12% as broader financial markets in turmoil

Bitcoin fell sharply on Aug. 5 to $49,221 after holding around $58,350 for about two hours.

At the time of writing, Bitcoin (BTC) had a daily trading volume of $79.5 billion, while its market cap had fallen to $1.04 trillion. The crypto asset is still 28.2% off its all-time high of $73,737 reached on March 14.

BTC 24-hour price chart | Source: crypto.news

The drop was part of a broader market decline that saw Ethereum (ETH) drop nearly 20% from $2,695 to $2,171 before making a slight recovery to $2,321, according to data from Crypto.news.

This market turmoil has led to the liquidation of over $1.07 billion worth of leveraged positions over the past 24 hours, with the majority of these being leveraged long positions. Data from CoinGlass reveals that Bitcoin and Ethereum long positions were the most affected, losing $305.49 million and $299.45 million respectively.

Crypto liquidation map – August 5 | Source: Coinglass

Analysts attribute this sudden market volatility to various external economic factors. In particular, Japan’s stock market saw a 7.1% drop in the Nikkei 225 index, which was driven by significant losses in Japanese banking stocks after the central bank raised interest rates.

Disappointing employment figures in the US, slowing growth in big tech stocks and reports of widespread liquidations of cryptocurrency trading firms, including Jump Crypto, also added to the pressure.

This latest drop represents the biggest 72-hour drop in over a year and has wiped out between $200 billion and $500 billion from the total value of the cryptocurrency market.

Amid the market chaos, the Bitcoin fear and greed index fell sharply to 31, a slide from last week’s peak of 74, which signaled a greedy market. At the same time, U.S.-based spot Bitcoin ETFs saw significant cash outflows, with a net withdrawal of about $237 million on Friday.

Despite the overall market crash, Bitcoin’s dominance index rose to 56.23%, its highest level since May 2021, indicating its increasing consolidation compared to other cryptocurrencies.

Meanwhile, market analysts believe that the escalating conflict between Iran and Israel could affect global market stability and impact cryptocurrency markets as investors turn to safer assets.