Bitcoin has experienced a sharp correction over the past 24 hours, plunging approximately 4% to trade around $99,302, briefly touching $99,100 as market anxiety mounts. This significant downturn is attributed to a confluence of escalating Middle East tensions, a massive cascade of liquidations totaling nearly $875 million across the crypto market, and a pervasive “risk-off” sentiment among investors.
The Geopolitical Shockwave
The primary catalyst for Bitcoin’s latest slide is the rapidly escalating conflict in the Middle East. Recent developments include the US and Israel confirming coordinated strikes on Iranian nuclear facilities, a move that has deeply unnerved global markets. Further fueling the tension, the Iranian Parliament has approved a bill to close the strategically vital Strait of Hormuz, a chokepoint through which approximately 20% of the world’s oil supply passes. While requiring approval from Iran’s Supreme National Security Council, the readiness of the Revolutionary Guards to implement such a closure poses an immediate threat to global stability and energy supply.
This geopolitical shock has triggered a widespread “risk-off” domino effect. Historically, Bitcoin has sometimes seen safe-haven inflows after initial panic sell-offs in geopolitical crises, according to analytics from CryptoQuant. However, the immediate reaction has been a broad de-risking across financial assets. Oil prices, reacting to the Strait of Hormuz threat, rose 1%, stoking fears of renewed inflation. This macro sensitivity is further evident in Bitcoin’s correlation to the S&P 500, which surged to 0.82, significantly higher than its 30-day average of 0.65.
Leverage Unwinding Amplifies Selling
The sharp price movement has triggered a massive unwinding of leveraged positions across the crypto derivatives market. In the past 24 hours alone, total crypto liquidations soared to nearly $875 million. A significant portion of this came from Bitcoin-specific liquidations, which accounted for approximately $233 million of that total. These forced closures of leveraged long positions, betting on rising prices, amplified the selling pressure as assets were automatically sold off to meet margin calls. Reflecting this intense trading activity, Bitcoin’s 24-hour trading volume spiked by an astounding 49.5%, indicating a frantic rush to exit positions.
Technical Breakdown and Market-Wide Weakness
From a technical standpoint, Bitcoin’s plunge below the crucial $100,000 psychological and support level is a bearish signal. The MACD (Moving Average Convergence Divergence) histogram, a momentum indicator, is currently at -708, reinforcing the strong bearish momentum gripping the market. Looking at the broader trend since July 2024, Bitcoin had seen a substantial rally, climbing from lows around $64,000 to peak above $110,000 in recent months. The current drop has effectively erased a significant portion of these gains, bringing the price back to levels not seen in some time.
The selling pressure is not confined to Bitcoin. The broader cryptocurrency market is also experiencing significant weakness. Over the last 24 hours, Ethereum (ETH) has fallen by 6.53%, Solana (SOL) by 4.56%, and XRP by 3.10%, further solidifying the prevailing bearish sentiment across digital assets.
How Far Can It Go?
The immediate outlook for Bitcoin appears precarious. The combination of sustained geopolitical instability, the cascading effect of liquidations, and the breach of key psychological support levels suggests that further downside cannot be ruled out. While historical patterns might suggest a eventual “safe-haven” inflow after the initial panic, the short-term trajectory will heavily depend on the de-escalation of Middle East tensions and whether Bitcoin can find strong new support levels to absorb the current selling pressure. Investors will be keenly watching for any signs of stabilization or further geopolitical developments that could dictate the market’s next move.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
Source: https://coindoo.com/market/bitcoin-plunges-to-99000-how-far-can-the-downturn-extend/