Investors lose $48bn as Bitcoin crashes to one-year low

Investors in the cryptocurrency market suffered a massive wealth erosion after Bitcoin plunged to a one-year low of about $59,000, wiping out approximately $48 billion in market value within minutes as stronger-than-expected U.S. inflation data triggered a broad selloff across risk assets.

The world’s largest cryptocurrency tumbled to an intraday low of $58,887 on Thursday after the latest U.S. Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, surged by 4.1 per cent year-on-year, its highest level in three years.

The hotter inflation reading shattered expectations of imminent interest rate cuts by the U.S. Federal Reserve and instead fuelled speculation that policymakers could raise rates again before the end of the year.

The development sparked a sharp rally in the U.S. dollar and Treasury yields, prompting investors to dump speculative assets, including cryptocurrencies.

Bitcoin, which has increasingly traded like a macro-sensitive risk asset, came under intense pressure as traders adjusted positions to reflect the prospect of prolonged high interest rates.

The selloff triggered a violent deleveraging across the crypto market, with more than $413 million worth of Bitcoin derivatives positions liquidated within 24 hours.

Market data showed that Bitcoin’s market capitalisation plunged by about $48 billion in just 25 minutes during Thursday’s trading session, one of the sharpest intraday declines recorded this year.

Analysts attributed the crash to a “long squeeze,” a situation where falling prices forced highly leveraged bullish traders to liquidate positions, thereby accelerating the market decline.

The bearish sentiment was further amplified by sustained institutional withdrawals from the cryptocurrency market. U.S. spot Bitcoin exchange-traded funds (ETFs) have now recorded seven consecutive weeks of net outflows, reflecting weakening institutional appetite for digital assets at current price levels.

Adding to the pressure, the Coinbase Premium Index, a key indicator of U.S. institutional demand for Bitcoin, remained in negative territory, signalling subdued buying interest and thinner market liquidity.

The combination of forced liquidations and declining institutional participation created a negative feedback loop that intensified selling pressure and pushed Bitcoin to its lowest level this year.

Despite the steep decline, analysts believe the market is approaching a critical support zone between $59,000 and $60,000, which could determine the next direction for the digital asset.

Technical analysts described the price range as a major battleground between buyers and sellers, noting that Bitcoin’s immediate trend remains bearish.

They said a decisive close above $61,800 could signal short-term stabilisation and possibly a market rebound, while a sustained break below the $59,000 support level may trigger another round of selling and open the door to deeper losses.

The latest rout highlights the growing correlation between cryptocurrencies and global macroeconomic developments, particularly monetary policy expectations in the United States.

With inflation remaining stubbornly high and the prospect of tighter financial conditions re-emerging, investors are increasingly reassessing their exposure to high-risk assets, including digital currencies.

Market participants say the next direction for Bitcoin and the broader crypto market will depend largely on future U.S. inflation readings, Federal Reserve policy signals and whether institutional demand returns to absorb the current wave of selling pressure.

For now, the sharp $48 billion value wipeout underscores the volatility and vulnerability of the cryptocurrency market to global economic shocks, reinforcing concerns that digital assets remain highly sensitive to changes in interest rates and investor sentiment.