Market volatility and liquidations
For the second day in a row, President Donald Trump’s reversals regarding the conflict between the United States and Iran were the main catalyst for the market, this time wiping out bitcoin’s gains and sending the asset falling below the $66,000 threshold. While his comments the day before sparked a bullish surge beyond $69,000, his more aggressive stance on Wednesday effectively dashed any hopes of a quick diplomatic resolution, causing a sharp turnaround in investor sentiment.
As market data shows, bitcoin briefly fell to $65,696 after Trump threatened to send Iran back to the Stone Age, underscoring how the leading cryptocurrency has lost the resilience it had shown in the aftermath of the war. Although it experienced a short-lived rebound past $67,000, the momentum petered out and, as of 2:20 p.m. EST, it was trading near $66,800.
This decline caused the market capitalization of bitcoin to increase from $1.37 trillion to $1.33 trillion, dragging the entire cryptocurrency economy to $2.38 trillion. This pullback triggered liquidations of approximately $48 million in leveraged positions over 12 hours and $103 million over 24 hours. In total, cryptocurrency liquidations exceeded $440 million, with long positions accounting for $274 million.
The geopolitical quagmire
While Trump has suggested that the United States may soon end hostilities, both his critics and supporters warn that declaring victory without reopening the Strait of Hormuz would deal a severe blow to America’s credibility. Reports that Iran would now charge transit fees in Chinese yuan or cryptocurrency are being interpreted as a direct attack on the global dominance of the US dollar. Analysts warn that if this practice becomes the new norm, it would mark a strategic defeat for Washington, undermining decades of financial hegemony. Compounding the challenge, NATO allies refused to join the conflict, leaving the United States increasingly isolated. Observers say this combination of economic setbacks and diplomatic resistance explains why the president’s messages have become increasingly erratic.
As the fog of war thickens, some analysts view bitcoin as a “residual indicator of risk absorption.” Despite the fall in prices, the technical landscape remains in an impasse. Liquidity remains heavily concentrated between $69,000 and $70,100, but lack of conviction on the demand side has capped recent rallies at $68,000. The $65,500 mark constitutes a crucial structural test. According to analysts, if further energy shocks or military escalation were to occur, crossing this level could trigger a massive cascade of forced liquidations.
FAQ â“
- Why did bitcoin fall below $66,000? Trump’s latest hardline statements on Iran have shaken markets, erasing recent gains for cryptocurrencies.
- What value was deleted? Bitcoin’s market capitalization fell by $40 billion, dragging the entire cryptocurrency economy down to $2.38 trillion.
- What triggered the liquidations? More than $440 million in leveraged positions were liquidated, with long positions being hit the hardest.
- What is the geopolitical angle? Yuan/cryptocurrency transit fees imposed by Iran in Hormuz challenge the dominance of the US dollar, fueling uncertainty.
