Bitcoin Drops 10% Amid Geopolitical Tensions and Regulatory Uncertainty

Bitcoin experienced a significant drop, falling below $100,000 for the first time since May 8th. This decline marked a notable shift in the cryptocurrency's trajectory, which had previously seen it reach heights of over $111,000. The drop was attributed to mounting macroeconomic pressures and a deterioration in retail investor sentiment. The cryptocurrency market, including Bitcoin, has been under strain due to various factors, including geopolitical tensions and regulatory uncertainties.

The decline in Bitcoin's price was particularly pronounced on Saturday, when it crashed below six figures, reaching $99,822. This drop came amidst heightened geopolitical tensions, with the US President's announcements and potential military actions against Iran contributing to the market's volatility. The uncertainty surrounding the US's role in the Israel-Iran conflict added to the market's jitters, as investors remained cautious about the potential impact on global markets.

Despite the challenges, Bitcoin's price action remained resilient at the start of the week, holding above the key psychological threshold of $100,000. However, the situation changed on Tuesday when news emerged that the US was aware of Iran’s leader's location but chose not to take any action. This news, coupled with reports that the US could join the war against Iran, led to a decline in Bitcoin's price. The cryptocurrency market showed signs of relief over the next two days as the US did not take any military action against Iran, allowing Bitcoin's price to consolidate.

The US Federal Reserve's decision to keep its interest rate unchanged at the 4.25%–4.50% range during its June meeting had a neutral impact on the markets. Fed Chair Jerome Powell's warning about ongoing policy uncertainty and the contingent nature of rate cuts based on labor and inflation data further underscored the market's cautious stance. The US Senate's passage of the GENIUS bill, which establishes a legal framework for stablecoins, was seen as a positive development for the crypto industry. This decision could enhance the legitimacy of stablecoins and facilitate wider adoption, potentially boosting the stablecoin market capitalization and having a positive correlation with Bitcoin's price.

On-chain data from CryptoQuant highlighted early signs of weakness in Bitcoin's demand. The Bitcoin Apparent Demand chart showed a decline in growth, falling below its 30-day Moving Average. This indicated softening demand for Bitcoin, which could potentially lead to further price corrections. The demand for new BTC entrants also weakened, with its demand momentum turning sharply negative, supporting a bearish thesis. Analysts projected that if demand continues to weaken, Bitcoin could find support near $92,000.

Despite the rising uncertainty, institutional and corporate demand for Bitcoin remained robust. Japanese investment firm Metaplanet announced the purchase of an additional 1,112 BTC, bringing its total holding to 10,000 BTC. Strategy, formerly MicroStrategy, added 10,100 BTC for $1.05 billion at an average price of $104,080 per BTC. Semler Scientific also announced a three-year plan to boost its Bitcoin holdings to 105,000 BTC by the end of 2027. These developments indicated a growing acceptance of BTC as a strategic asset, potentially driving long-term adoption.

The Relative Strength Index (RSI) momentum indicator on the daily chart was steady just above its neutral level of 50, reading 52, which indicated indecisiveness among investors. The Moving Average Convergence Divergence (MACD) indicator displayed a bearish crossover last week, showing rising red histogram bars below its neutral level. This indicated bearish momentum and gave credence to a downward trend. If Bitcoin continues its correction and closes below the 50-day EMA at $103,200 on a daily basis, it could extend the decline to retest its key psychologically important level at $100,000. However, if it closes above its FVG level at $108,064, it could extend the recovery toward retesting the May 22 all-time high of $111,980.