Bitcoin gave back last week's gains over a single weekend, sliding to $68,700 after U.S. President Donald Trump issued a 48-hour ultimatum to Iran. The threat to attack Iranian power plants unless the Strait of Hormuz is reopened sent a jolt through a market that had spent the previous week building confidence around de-escalation.
The sudden shift in rhetoric triggered a massive liquidation event. Over the past 24 hours, $299 million in total liquidations hit the crypto markets. The damage was heavily skewed toward those betting on prices going up, with long liquidations accounting for roughly 85% of the total. Bitcoin longs took $122 million in damage, while Ether longs lost $95.7 million. The largest single liquidation was a $10 million BTC-USDT swap on OKX.
The broader crypto market fell in lockstep with Bitcoin. Ether dropped to $2,114, XRP lost ground to $1.41, and Solana fell to $88.55. The steep drop highlights how one-sided market positioning had become heading into the weekend, leaving traders vulnerable to a headline shock. Eight consecutive days of gains had built up a heavily bullish book, and one Truth Social post undid all of it.
Experts are pointing to the potential for a prolonged conflict in the Middle East as a major headwind for crypto. Any disruption to global trade routes increases uncertainty across financial markets, and Bitcoin remains highly correlated with risk assets like U.S. stock indices. The Strait of Hormuz remains effectively closed to most commercial traffic, with roughly 20% of the world's oil and gas flows still disrupted. Rising oil prices could also spark inflationary forces, adding pressure to an already tense economic environment.
Times Have Changed...
Bitcoin used to behave like it was in its own world, and what global markets were doing at any given moment didn't really matter, as there were no signs whatever concerned them mattered Bitcoin traders. Those days are long gone. reacting like most other investments over the past couple weeks has made it hard to argue that it still serves as a hedge against inflation and geopolitical turmoil. The crypto asset has yet to prove its merits as an independent safe haven, reacting more to global liquidity conditions and movements in traditional financial markets. The Fed's dovish lean from its Wednesday rate hold, which should have supported risk assets, has been completely overshadowed by war headlines.
The 48-hour window means the deadline arrives Monday evening. If Iran doesn't comply, and there's no indication it will, the market faces the prospect of strikes on power infrastructure, which would be the first direct targeting of civilian energy systems in the conflict. Traders are now holding back from making large directional bets, waiting to see how the situation unfolds.
Geopolitical shocks often create short-term panic, but they also clear out over-leveraged positions. The market just got a hard reset, and the real test will be how it reacts when the 48-hour deadline hits.
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Cedric Holloway
Global Crypto Press / New York Newsroom
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