Bitcoin Drops 1.6% to $100,982 as Geopolitical Tensions Surge

Bitcoin (BTC) experienced a significant decline, falling below the $100,000 mark for the first time since May. This drop was triggered by escalating geopolitical tensions following US airstrikes on key Iranian nuclear sites. The market reacted with widespread panic, leading to over $1 billion in liquidations. BTC reached a low of $98,385 on Sunday before recovering to settle at $100,982. The current session sees BTC marginally up, trading around $101,252, but it continues to show signs of weakness.

Industry veteran Arthur Hayes remains optimistic about Bitcoin's long-term prospects despite the recent pullback. Hayes believes that the decline is temporary and that the broader economic backdrop could soon turn bullish for the asset. He suggests that rising global pressure could lead to more liquidity being injected into the financial system, benefiting BTC and restoring it as a reliable store of value. Hayes' comments came after Bitcoin briefly slipped below $100,000 over the weekend, falling to a low of $98,385 on Sunday as geopolitical tensions escalated. However, it rebounded to reclaim $100,000 and end the weekend at $100,982. BTC’s recent slide has seen it drop to its lowest levels since May and is part of a broader downturn in the crypto market.

Spot Bitcoin ETFs in the US saw a sharp drop in inflows as investor sentiment turned bearish amid escalating geopolitical concerns. Data showed that spot Bitcoin ETFs saw $1.02 billion in inflows over the past week, a substantial decline from $1.39 billion the week prior. The previous week started well, with Bitcoin ETFs registering significant inflows on Monday and Tuesday. However, inflows fell off a cliff on Friday with just $6.37 million, down 98% from the average of the previous three days. Friday’s activity was confined to BlackRock’s IBIT, which saw $46,91 million in inflows. However, this was offset by a $440.5 million outflow from Fidelity’s FBTC. Markets have been jittery since the US launched coordinated airstrikes on Iran, marking a turning point in the Israel-Iran conflict. Iran warned of consequences and shut down the Strait of Hormuz, a key passage used for transporting nearly 20% of the world’s oil supply. Analysts point out that oil prices could spike if the conflict continues.

Crypto market liquidations topped $1.3 billion on Sunday as investors reeled from the news that the US had conducted airstrikes at key installations in Iran. With traditional markets shut over the weekend, the crypto market was the first to bear the brunt of the escalating geopolitical situation. As a result, BTC dipped below $100,000 on Sunday, while other cryptocurrencies registered notable declines. Analysts believe markets are pricing in the conflict and do not expect a prolonged escalation in hostilities. Iran’s foreign minister also met with Russian officials in Moscow as diplomatic backchannels reopened following the airstrikes. BTC’s climb back above $100,000 comes alongside modest movement in gold prices, and a subdued reaction across oil and equity futures. According to analysts, traders are expecting a limited and contained conflict. The Kobeissi Letter posted on X that markets are expecting a short-lived war, stating, “Over the last 72 hours, the US bombed Iranian nuclear sites, Russia said countries are ready to supply Iran with nukes, and Iran's parliament voted to close the Strait of Hormuz. Yet, stock market futures are down a mere -0.5% at the open, and oil prices are up less than +2.5%. This is NOT a market that is pricing in a long-term conflict. If the market was pricing in JUST a closure of the Strait of Hormuz, oil prices would be at $120+. Objectively, the market is still expecting a short-lived war.”

Pav Hundal, lead analyst at Swyftx, believes that if tensions in the Middle East decrease, investor confidence could rebound, allowing prices to recover. However, he cautioned that nobody knows what will happen next in the Middle East, creating further market uncertainty. BTC registered a sharp drop on Thursday, falling nearly 3%, slipping below the 20-day SMA and settling at $105,826. Selling pressure intensified on Friday as BTC fell to a low of $102,854. However, it recovered from this level to register a marginal increase, reclaim $106,000, and settle at $106,106. Price action was mixed over the weekend as BTC registered a drop of 0.59% on Saturday before registering a marginal increase on Sunday to settle at $105,561. BTC raced to an intraday high of $108,939 on Monday. However, it could not stay at this level and settled at $106,808, ultimately registering an increase of 1.18%. Sentiment changed on Tuesday as BTC fell over 2%, slipping below the 20-day SMA and $105,000 to settle at $104,519. BTC registered a marginal increase on Wednesday, rising 0.35% to $104,884. However, it was back in the red on Thursday, dropping 0.24% to $104,631. BTC reached an intraday high of $106,513 on Friday but lost momentum after reaching this level. As a result, it fell 1.19%, slipping below the 50-day SMA and settling at $103,888. Sellers retained control on Saturday as the price fell 1.17% to $102,180. BTC plunged below $100,000 on Sunday, falling to an intraday low of $98,385 as market sentiment worsened. However, it recovered to reclaim $100,000 and settle at $100,982. The current session sees BTC marginally up as buyers struggle to build momentum and push the price higher. A bearish MACD indicates that buyers are in control.