Although Bitcoin managed to rally to $47,000 just an hour later, the world's biggest cryptocurrency has been pinned below $50,000 since.
A terrifying plunge rattled the crypto markets over the weekend.
Bitcoin, which had managed to hit $57,000 on Friday, began to grind downward in the evening — dipping below $53,000 at one point.
Some analysts on Twitter confidently declared that the bottom was in, but fresh misery was to follow.
In the early hours of Saturday morning, it took less than an hour for BTC to fall by a staggering 18% — hitting lows of $42,874.62.
Although Bitcoin managed to rally to $47,000 just an hour later, the world's biggest cryptocurrency has been pinned below $50,000 since.
It's fair to say that the scale of this crash took most analysts on Crypto Twitter by surprise.
And despite some trying their best to put a brave face on things — once again arguing that Bitcoin is "on sale" and that prices will recover — remaining above $50,000 had been regarded as crucial for retaining bullish momentum.
Delivering a post-mortem of what happened, Blockware lead insights analyst Will Clemente said a "perfect storm" had formed that caused a "cascade" of long liquidations — and the crash was exacerbated by the thin order books seen during weekend trading.
He went on to warn that "too many people are trying to project the past onto the future, instead of imagining what the future looks like" — adding that a dramatic December rally, like one seen in 2017, now looks unlikely.
Data from Coinglass shows that more than $2 billion in long positions were liquidated between Friday and Saturday afternoon.
Over on the spot markets, it seems like short-term holders of Bitcoin also suffered the most pain, with the BTC supplies held by long-term investors remaining "relatively unchanged" over the past seven days.
Figures from Glassnode reveal realized losses hit $2.18 billion over the weekend — that's "the third largest on-chain capitulation in history."
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Pain Spreads to Altcoins
As ever, Bitcoin's plunge caused misery to rapidly spread to the altcoin markets.
CoinMarketCap data shows Ether plunged to $3,632 in the early hours of Saturday morning — but it too witnessed a bounceback to $3,909.
Overall, ETH's crash was less severe than BTC's — prompting speculation high gas fees may have prevented a more brutal sell-off.
Indeed, looking at price activity over the past 24 hours, Bitcoin is currently nursing losses of 15.76%... way beyond ETH's 6%.
The total market capitalization of all cryptocurrencies came perilously close to losing $2 trillion at the height of Saturday's sell-off.
Looking ahead to the next week, and it'll be interesting to see whether any institutions take the opportunity to buy Bitcoin — or whether risk-off sentiment will remain because of the Omicron variant.
The crypto markets will also be keeping a close eye on inflation, with the latest figures from the U.S. set to be released on Friday.
October's data saw the Consumer Price Index surge by 6.2% year on year — the biggest such increase since 1990.
Because BTC is regarded by some as a hedge against inflation — not least because it has a fixed supply of 21 million, and new coins can't be created — some analysts are hopeful that the latest update could contribute to an uptick in prices.
According to Bloomberg, economists are anticipating that inflation will hit 6.7% in November 2020 — and if these figures are realized, it would represent the highest inflation since 1982.
