Key Points
- Bitcoin fell to its lowest price since May, dropping below $99,000 over the weekend.
- A combination of rising tensions in the Middle East and concerns about higher U.S. inflation caused the selloff.
- The flood of money into new Bitcoin ETFs dried up just as geopolitical news worsened.
- The price drop triggered over $1 billion in forced selling, which further accelerated the decline in prices.
Bitcoin and the entire crypto market took a nosedive over the weekend, with Bitcoin’s price plunging below $99,000 for the first time since May. The sharp selloff was triggered by a perfect storm of rising war fears in the Middle East and renewed worries about the U.S. economy.
Geopolitical jitters kicked off the crash. Iran reportedly threatened to block the Strait of Hormuz, a critical oil shipping route. That threat alone could send oil prices soaring, which in turn could push U.S. inflation back up to scary levels. This has traders worried that the Federal Reserve might have to rethink its plans for interest rate cuts, making risky assets like crypto much less attractive.
Adding to the panic, the big institutional money that had been flooding into Bitcoin ETFs suddenly dried up at the end of last week, right as President Trump’s administration began reviewing its options on Iran.
The sudden price drop then triggered a domino effect that was anything but pleasant. As Bitcoin fell below key price levels, it caused a wave of forced liquidations on crypto exchanges. In just 24 hours, over $1 billion in cryptocurrency positions were wiped out, with almost all of them belonging to traders who had bet on the price increasing.
While prices started to recover slightly by Sunday evening, the weekend’s chaos showed that Bitcoin is currently behaving more like a risky tech stock than the “inflation hedge” it’s often claimed to be.
