Bitcoin experienced a sharp decline, falling 6.25% to $63,442 within a 24-hour period, as a combination of geopolitical instability and aggressive market liquidations triggered a sell-off. The drop intensified, with Bitcoin briefly crashing to as low as $62,938, representing a 4.2% intraday fall. The broader crypto market followed suit, erasing approximately $128 billion in total market capitalization according to CoinGecko data.
The sell-off was fueled by escalating geopolitical tensions in the Middle East. Israel announced it had launched a preemptive strike on Iran, a move that former U.S. President Donald Trump confirmed involved the United States. In an eight-minute video posted on Truth Social, Trump stated the goal was to remove what he termed "imminent threats" from Iran. This development injected significant uncertainty and risk aversion into global markets, impacting risk assets like cryptocurrencies.
Market mechanics exacerbated the decline. The downturn triggered a wave of liquidations, with nearly $100 million in Bitcoin long positions being wiped out. Specifically, about $87.8 million in BTC positions were liquidated as funding rates turned negative, a clear signal of heavy leveraged selling pressure. This flushing out of leveraged traders created a cascading effect, accelerating the price drop.
Technical analysis suggests Bitcoin is at a critical juncture. Analysts warn that if the cryptocurrency fails to reclaim the $66,307 level, it could be poised to retest lower support zones near $60,074. The decline reflects broader weakness across the crypto sector, with Ethereum (ETH) also sliding 5% to $1,783 alongside Bitcoin's fall.
