Bitcoin Drops 10% to $101,300 Amid Geopolitical Tensions

Bitcoin's price has experienced a significant drop, falling from nearly $112,000 to $101,300, which has caused market sentiment to shift towards fear. Despite this correction, the sentiment is not as dire as it was in April. The Crypto Fear & Greed Index, which measures market sentiment, has recently turned neutral and fearful, indicating that participants do not expect deeper corrections. However, there is a possibility of a further drop to $92,500 if the fair value gap fails to act as a demand zone.

On-chain metrics reflect cautious optimism, but Bitcoin and the broader crypto market lack momentum. The bullish sentiment that persisted for nearly two months has recently sunk towards neutral levels, resembling the market conditions in March. A sustained drop below the $98,000-$100,000 range could shift sentiment even more bearishly. Technical analysis of the weekly chart reveals that the $97,900-$100,700 range is a fair value gap, expected to serve as support in the coming days. This range has already been defended during the weekend’s price drop.

Further uncertainty in traditional markets could lead to a Bitcoin fall below $98,000. However, the bias remains bullish after the market structure break in May. The Fibonacci retracement levels highlight $93,200, $88,800, and $82,500 as support levels in case $98,000 is ceded to the bears. Additionally, the On-Balance Volume (OBV) did not highlight overwhelming selling pressure on the weekly chart. The 6-month liquidation heatmap shows that $92,600 would be an attractive price target. In light of the uncertain macroeconomic situation, a correction to $94,000 might be possible. The liquidity cluster could pull the price lower too.

Investors and traders need to be cautious. Without significant demand, a bullish reversal from $100,000 could be difficult. The market structure on the 1-day chart has already flipped bearishly. Once sentiment is sufficiently fearful, Bitcoin might begin to recover. The Crypto Fear & Greed Index has seen a significant shift in recent weeks, initially standing at 76, indicating a state of greed among investors. However, it has since plummeted to 37, reflecting a transition to fear. This decline suggests that investor sentiment has shifted dramatically within a short period, moving from a state of optimism to one of caution and apprehension.

The Fear & Greed Index is designed to measure the emotional state of the market, with scores below 40 signaling fear and scores above 60 indicating greed. The recent drop to 37 underscores the growing unease among investors, who are now more cautious about the market's future. This shift in sentiment is not isolated; it aligns with broader market trends and geopolitical events that have influenced investor behavior. One of the key factors contributing to this shift is the recent geopolitical tensions, particularly the U.S. airstrikes on Iranian nuclear sites. These events have escalated fears of a broader conflict in the Middle East, leading to a global "risk-off" sentiment. Investors have responded by selling off riskier assets, including cryptocurrencies, in favor of safer options. This sell-off has had a significant impact on the market, with Bitcoin and other major cryptocurrencies experiencing sharp declines.

The immediate trigger for the market crash was the geopolitical event, which caused over $636 million in crypto leveraged positions to be liquidated. Bitcoin, one of the hardest-hit cryptocurrencies, plummeted sharply to $100,000 before managing a partial recovery. Despite this bounce, the overall market sentiment remains fragile. Ethereum, XRP, Solana, Cardano, and Dogecoin also faced heavy selling pressure, with losses ranging from 7% to 15%. Analysts warn that unless tensions between the U.S. and Iran ease, cryptocurrencies are likely to remain under pressure. The market's focus is now on whether Bitcoin can hold above the $100,000 support level. If it fails to do so, further losses could drag the market even lower. The Crypto Fear & Greed Index currently sits at 40, indicating a neutral sentiment, but this could quickly swing toward "Fear" if geopolitical tensions intensify in the coming days. The crypto market is currently more influenced by geopolitical events than by technical patterns, and until the situation stabilizes, volatility is expected to remain high.