Cryptocurrency markets experienced a sharp decline on February 27, 2026, as escalating geopolitical tensions between the United States and Iran triggered a broad risk-off sentiment. Bitcoin (BTC) fell 3.2% in 24 hours, dropping below the $66,000 level to around $65,000. Major altcoins followed suit, with Ethereum (ETH) falling back below $2,000 to approximately $1,380 and Solana (SOL) declining to $83.
The sell-off is directly linked to heightened fears of a potential military conflict. The U.S. State Department authorized the departure of some personnel from its embassy in Israel, while China advised its citizens to leave Iran and avoid travel there. This news amplified market anxiety, leading to significant liquidations. According to Coinglass data, $294.8 million in leveraged crypto positions were liquidated in 24 hours, with $211.5 million from long positions and $83.3 million from short positions. Over 107,000 traders were affected, with the largest single liquidation occurring on the BTC/USDT pair on the Bybit exchange.
Beyond immediate price action, the situation poses a specific threat to the Bitcoin network's hashrate. Analysis indicates that Iran, which mines Bitcoin using heavily subsidized electricity at an estimated cost of $1,320 per coin, contributes between 2% to 5% of the global hashrate. This mining activity, largely operated by entities linked to the Islamic Revolutionary Guard Corps (IRGC), generates an estimated $1 billion annually in revenue, serving as a key tool for sanctions evasion.
Market analysts warn that military action could cripple this sector. Independent analyst Shanaka Anslem Perera stated that strikes on Iran's critical infrastructure would cascade through the power grid that supports mining farms. An estimate from JPMorgan suggests a 7-to-10 day air campaign could cut Iranian electricity generation by 30% to 50%. "The global Bitcoin hashrate drops 2 to 5 percent overnight," Perera predicted. Blockstream CEO Adam Back added a bearish perspective on market support, noting that retail investors are "all in" and lack capital to buy dips, potentially exacerbating downside volatility.
The diplomatic backdrop remains tense. Former President Donald Trump had recently issued an ultimatum regarding Iran's nuclear program. Although indirect negotiations were held in Geneva, mediated by Oman, they concluded without a deal, with Iran signaling it was not ready to meet U.S. demands. Concurrently, the U.S. military has gathered a fleet of aircraft and warships in the region.
