Bitcoin Dives Below $66K as Macro Risks Send Crypto Markets into Freefall

Bitcoin (BTC) plummeted below $66,000 Friday morning in a dramatic selloff that wiped out most of Wednesday’s gains, as mounting macroeconomic concerns sent shockwaves through risk assets worldwide. The cryptocurrency king, which had surged above $68,000 just days ago, shed 3% in a matter of hours, dropping to $65,600 and reigniting fears of a broader market correction.

The carnage wasn’t limited to Bitcoin. The CoinDesk 20 Index, a broad measure of the crypto market, tumbled 2.3% in 24 hours, with major altcoins like Ethereum (ETH), XRP (XRP), and Solana (SOL) mirroring Bitcoin’s decline. The synchronized selloff painted a grim picture for crypto investors, who are now grappling with a perfect storm of economic headwinds.

Crypto-related equities, which had enjoyed a brief respite earlier in the week, were not spared from the bloodbath. MicroStrategy (MSTR), the largest corporate holder of Bitcoin, slipped 3%, while Coinbase (COIN) fell over 2%. Even Circle (CRCL), the stablecoin issuer that had seen its stock surge nearly 50% in a matter of sessions, plunged almost 5%, snapping its impressive rebound.

The pain was even more acute for crypto miners, who have increasingly tied their fortunes to AI infrastructure buildouts. IREN (IREN), Cipher Mining (CIFR), Core Scientific (CORZ), and TeraWulf (WULF) all shed between 6% and 8%, underscoring the sector’s vulnerability to broader market sentiment.

The crypto selloff coincided with a broader retreat in U.S. equity markets, with the tech-heavy Nasdaq down 0.8% and the S&P 500 lower by 0.6%. The synchronized decline across asset classes highlighted the pervasive fear gripping investors, who are now grappling with a complex web of risks.

At the heart of the turmoil is a hotter-than-expected Producer Price Index (PPI) inflation reading for January. Core PPI rose 3.6% year over year, significantly above the 3.0% estimate and up from 3.3% previously. The data dashed hopes of a continued cooling in inflation and sent shockwaves through financial markets. As a result, the odds of a Federal Reserve rate cut at the March 18 meeting have plummeted to just 4%, with markets now pricing in a 96% chance of no action.

Adding to the unease are concerns about stress in the credit markets. Credit spreads, a key indicator of market risk, have widened to their widest levels in four months. Private equity giants KKR (KKR), Ares (ARES), and Apollo Global Management (APO) all plunged 6% to 7% to fresh lows, underscoring the fragility of the financial system.

Geopolitical tensions are also weighing heavily on investor sentiment. Prediction markets have seen a sharp rise in the odds of U.S. strikes against Iran, following reports that the U.S. has begun evacuating embassy staff from Israel. The escalating conflict in the Middle East has added another layer of uncertainty to an already volatile market environment.

In a flight to safety, investors have flocked to traditional safe-haven assets. The U.S. 10-year Treasury yield slipped below 4% for the first time since November 2024, while gold surged 1% to above $5,230 an ounce. Silver also saw a strong rally, jumping 4% to trade back above $92. Even crude oil joined the rally, climbing 2.3% to above $67 a barrel.

The broader implications of the selloff are still unfolding, but one thing is clear: the crypto market is facing its toughest test yet. With macroeconomic risks mounting and investor sentiment souring, the road ahead could be rocky for Bitcoin and its peers.

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