Bitcoin Plummets 14% to $102,832 Amid Middle East Tensions

Bitcoin (BTC) experienced a significant decline, extending its losses for a third consecutive day as tensions in the Middle East escalated. The cryptocurrency plummeted to a low of $102,832, driven by bearish market sentiment following Israel's preemptive strikes on Iranian military facilities. This geopolitical event dampened the bullish outlook that had previously fueled speculations of BTC surpassing $111,000. Despite a rebound to $105,000, the flagship cryptocurrency remained in the red, reflecting the broader market's pessimism.

Traders and holders of Bitcoin are preparing for increased volatility as on-chain data indicates a steady decline in exchange and over-the-counter (OTC) balances. This trend suggests a tightening supply as traders accumulate the asset, with centralized exchanges reporting substantial declines in their Bitcoin balances. Since the beginning of 2025, these balances have dropped by over 14% to 2.5 million BTC, a level not seen since August 2022. This reduction in supply on centralized exchanges typically signals growing investor confidence, as assets are moved into cold storage. However, it also decreases the liquid supply, potentially leading to price spikes as demand for the increasingly scarce asset rises. OTC Bitcoin reserves are also at historic lows, with a 19% drop in balances since January, further amplifying the supply squeeze.

Bitcoin's decline below $106,000 on Thursday intensified bearish sentiment, with the cryptocurrency falling to an intraday low of $102,832 before rebounding. This sudden drop sent shockwaves through the crypto market, with its market cap plummeting to $3.24 trillion. The decline resulted in the liquidation of $645 million in long and short positions within 24 hours, with $297 million tied to Bitcoin longs alone. A significant $201 million liquidation occurred on a BTC/USDT trade, highlighting the market's volatility.

GameStop's announcement to add more Bitcoin to its balance sheet by boosting its private convertible note offering to $2.25 billion sent its shares into a freefall, plummeting 22%. The retailer aims to raise funds for general corporate purposes, including potential future Bitcoin purchases. This move follows the company's earlier purchase of 4,710 BTC, valued at around $513 million, and indicates a firm commitment to building its corporate Bitcoin treasury. However, shareholders expressed dissatisfaction with the pivot towards Bitcoin, leading to a decline in the company's share price, which has struggled to maintain its upside momentum since announcing mixed earnings for the first quarter of 2025.

The Czech Republic's political landscape was shaken by a Bitcoin scandal, leading to a no-confidence vote against the ruling party. The opposition accused the government of corruption over a $45 million Bitcoin payment from a convicted criminal. The Justice Ministry sold almost 500 Bitcoin for 1 billion Czech koruna in an auction, received from Tomas Jirikovsky, who was convicted of embezzlement, drug trafficking, and weapons violations. The opposition demanded a probe into the auction and the ministry's conduct, alleging that the winners of the Bitcoin auction were demanding their funds back. The Justice Minister Pavel Blazek resigned amid the scandal, denying any wrongdoing and stating that his resignation was to protect the government's reputation in an election year.

Bitcoin's price action was heavily influenced by the escalating tensions in the Middle East, which plunged the markets into chaos. The cryptocurrency surged past $110,000 at the beginning of the week, fueling speculations of a move past $111,000 and a new all-time high. However, Israel's preemptive strikes on Iran's military and nuclear facilities led to a significant decline in BTC's price, falling below $105,000 and reaching a low of $102,832. This sudden drop sent shockwaves through the market, dragging the broader crypto ecosystem down and causing the crypto market cap to fall over 4% to $3.24 trillion. The decline caught an optimistic market off guard, resulting in the liquidation of over $427 million in long positions within 24 hours. While BTC has dropped substantially, gold and oil prices have surged, but analysts believe this trend could reverse soon if historical trends are anything to go by. Bitcoin entrepreneur Anthony Pompliano highlighted that in a similar situation, Bitcoin outperformed gold and oil over the first 48 hours.