Bitcoin Plunges 1.1% as Geopolitical Tensions Surge

Bitcoin experienced a tumultuous period, initially plunging to $98,000 on Sunday, marking its lowest point in over a month. Within less than an hour, it rebounded above $102,000, only to slip back down. At the time of reporting, it was trading at $100,879. The crypto market was in chaos, with over $1 billion in crypto positions liquidated in just 24 hours, and over 95% of these were long bets.

The situation worsened as inflows into spot Bitcoin ETFs dried up. Between Monday and Wednesday, $1.04 billion had flowed in. However, by Thursday, this number stagnated. On Friday, only $6.4 million came in, coinciding with President Donald Trump's early departure from the G7 and his announcement of a two-week review of US options on Iran. This shift undermined the assumption that Bitcoin would act as a safe haven, causing it to trade more like a risky tech stock. The correlation between Bitcoin and the Nasdaq surged in recent weeks, according to a crypto data provider.

The broader financial markets also felt the impact. Oil prices initially surged, with US crude rising $1.76, or 2.38%, to $75.60 per barrel, and Brent crude climbing $1.80, or 2.34%, to $78.81. Brent even briefly touched $81, a 5.7% spike, before retreating. By press time, these gains had vanished, and oil was down 0.5%. The market's focus shifted to Tehran, awaiting Iran's next move. Hossein Amir-Abdollahian, Iran’s foreign minister, stated that Iran reserves “all options” to defend its sovereignty. The price surge could reverse entirely if Iran chooses not to respond.

Stock indexes across Asia and Europe also experienced significant declines. In Japan, the Nikkei 225 dropped 0.56%, and the Topix fell 0.49%. Tech companies were the hardest hit, with Screen Holdings crashing 4.78%, Lasertec Corp sinking 4.31%, and Disco Corp going down 3.38%. In South Korea, the Kospi index lost 1.05%, and the Kosdaq, which includes smaller-cap companies, fell 1.78%. The country’s top automakers took the brunt, with Hyundai Motor shares dropping 4.05%, and Kia Corp falling 4.15%. Australia’s S&P/ASX 200 also took a dive, down 0.76%.

In Europe, the IBEX 35 rose 0.77%, closing at 13,850.3, and Germany’s DAX jumped 1.27% to 23,350.55. However, the FTSE in London dropped 0.2% to 8,774.65, and France’s CAC 40 was completely flat at 7,589.66. The STOXX600, a broader European index, barely moved, up just 0.13% to 536.53. The euro was trading at $1.15 against the dollar after going as high as $1.8 just an hour ago.

This volatile period highlights the interconnected nature of global financial markets and the impact of geopolitical events on various asset classes. The sudden shift in Bitcoin's behavior from a safe haven to a risky asset underscores the market's sensitivity to external shocks. The drying up of ETF inflows further exacerbated the situation, leading to significant liquidations and price fluctuations. The market's focus on Iran's next move adds an element of uncertainty, with potential for further volatility depending on the region's response.