Bitcoin sinks below $99,000 as U.S. strikes on Iran trigger crypto market sell-off

Over the weekend, Bitcoin saw a significant drop, falling to its lowest level since May as geopolitical tensions in the Middle East and rising inflation concerns spurred a widespread sell-off in digital currencies. On Sunday, Bitcoin slipped below the crucial $99,000 threshold, marking its lowest point in more than a month. Currently, Bitcoin is trading around $99,380, reflecting a decline of over 2% in the past 24 hours. Other cryptocurrencies, including ether, which fell by 5% to under $2,200, alongside Solana, XRP, and dogecoin, also experienced notable losses, pulling the entire crypto market deeper into the red. The sell-off is attributed to a combination of escalating geopolitical risks and macroeconomic apprehension. Reports indicate that Iran has threatened to obstruct the Strait of Hormuz, a crucial shipping route responsible for approximately 20% of the world's oil supply. JPMorgan has warned that a full closure of this vital passage could catapult oil prices to as high as $130 per barrel. Such a surge could potentially drive U.S. inflation back toward 5%, a level not seen since March 2023, when the Federal Reserve was actively increasing interest rates. This economic outlook has prompted traders to reassess interest rate trajectories and shift away from speculative investments like cryptocurrencies. Although Bitcoin is often lauded as a hedge against inflation, recent behavior suggests it is acting more like a volatile tech stock. Data from crypto analytics firm Kaiko indicates that Bitcoin’s correlation with the tech-heavy Nasdaq has surged in recent weeks, following a period of rising investments in spot Bitcoin ETFs. Institutional investment trends appear to have changed as well, with over $1.04 billion flowing into spot Bitcoin ETFs from Monday to Wednesday last week, according to CoinGlass data. However, those inflows dwindled sharply heading into the weekend, recording no net movement on Thursday and only $6.4 million on Friday. This shift coincided with President Donald Trump’s early departure from the G7 summit and the announcement of a two-week review of U.S. options concerning Iran. The technical analysis also contributed to the market downturn. Research from CoinGlass shows that Bitcoin’s fall below the $99,000 mark prompted forced liquidations across offshore derivatives platforms such as Binance and Bybit. At one point on Sunday, over $1 billion in crypto positions were liquidated in just 24 hours, with more than 95% of those being long positions, highlighting the substantial overexposure in the market as the weekend approached.