Investor Sentiment Crumbles on Middle East Tensions and PPI Shock, Raising Risk of Further Bitcoin Plunge

▲ Investor sentiment collapses amid Middle East tensions and PPI shock, raising the possibility of further Bitcoin declines / Gemini-generated image

Geopolitical tensions combined with inflation fears have cast dark clouds over global asset markets. As risk-off sentiment intensifies, the cryptocurrency market, including Bitcoin, is plunging across the board.

According to CoinMarketCap data as of 7:09 a.m. KST on the 28th, the total global cryptocurrency market capitalization fell 2.8% from the previous day to $2.26 trillion. The “Fear & Greed Index,” a key gauge of investor sentiment, remains deep in the “Extreme Fear” zone at 16.

Bitcoin, the market bellwether, was trading at $65,457.81, down 2.92% over the past 24 hours, barely holding above the $65,000 level. Ethereum, the leading altcoin, plunged 5.55% to $1,918.23, decisively breaking below the key psychological support level of $2,000. Other major large-cap coins also remained firmly in the red, including Solana (-5.60%), Dogecoin (-3.83%), Cardano (-3.46%), and XRP (-3.27%), underscoring the breadth of the market shock.

The latest downturn in the crypto market comes after a series of negative developments that rattled Wall Street overnight, heightening broader risk aversion. The three major U.S. stock indexes closed lower for a second consecutive session, weighed down by three primary factors.

First, escalating geopolitical risks in the Middle East have fueled concerns. With major countries such as the United States and the United Kingdom urging their citizens in Iran to evacuate, fears of war have spread across financial markets. Second, a renewed “inflation shock” emerged. In January, the U.S. Producer Price Index (PPI) rose 0.5% month-over-month, while core PPI surged 0.8%, both significantly exceeding market expectations. Concerns that companies may pass on tariffs to consumers have dampened hopes for easing inflation. Finally, news that UK mortgage lender MFS filed for court administration stoked fears of distress in the private credit market, triggering a domino sell-off in major Wall Street bank stocks and further freezing investor sentiment.

The short-term outlook for the cryptocurrency market remains shrouded in uncertainty. Unless macroeconomic instability and geopolitical tensions ease, it will be difficult for Bitcoin to find a clear rebound catalyst. Heightened volatility is likely to continue as the market tests support around the $65,000 level. If this threshold fails, fear could accelerate, potentially leading to further sharp declines, underscoring the need for thorough risk management.

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