Bitcoin’s rally stalled as it fell from more than $69,000 to around $67,000, causing more than $470 million in liquidations and wiping out $40 billion in market capitalization.
Market capitalization shrinks amid liquidation
On February 26th, Bitcoin’s rescue rally hit a wall. After easily breaking through the $69,000 mark, the cryptocurrency struggled to maintain its upward trajectory. According to market data, it fell precariously to $66,511 before a partial but quick recovery back around $67,000. This cooling-off period is in stark contrast to the previous 24-hour period when Bitstamp data recorded a sharp spike toward a psychological ceiling of $70,000.
The withdrawal wiped out roughly $40 billion from Bitcoin’s market capitalization, dropping from $1.38 trillion to $1.34 trillion in one day. The broader crypto economy felt the chill, falling 2.4% to a total of $2.38 trillion. Meanwhile, market-wide volatility wiped out over $470 million in leveraged positions in 24 hours.
Bitcoin’s roughly 2% decline went hand in hand with the stock market downturn. By 12:30 p.m. ET, the Nasdaq Composite Index was reeling, down more than 300 points. Even the “AI halo effect” has begun to fade. Even though Nvidia posted huge profits that shattered Wall Street expectations, investors relented. Growing disillusionment with the massive capital investments required by the artificial intelligence giant led to a widespread selloff, with the Dow Jones Industrial Average and S&P 500 also falling into the red.
On the other hand, the main trigger for this global shift in risk-off direction appears to have been the intermittent talks between the United States and Iran. Some social media reports suggest that Iran has rejected a US request to transfer enriched uranium out of the country. Although this has not been confirmed, such defiance, if true, increases the likelihood of a direct military conflict, a scenario likely to destabilize energy markets and disrupt global supply chains and price stability.
According to Bitunix analysts, this geopolitical uncertainty is a factor that is polarizing investors. High-growth assets will be targeted, while traditional safe-haven assets will be “blessed”.
“In the event of a direct military conflict between the US and Iran, gold prices could rise by around 15% within two weeks on safe haven demand, with a potential price target in the range of $5,500-$5,800 an ounce,” analysts said.
Conversely, risk assets such as Bitcoin and tech stocks are facing the double whammy of tight liquidity and a strong dollar. If tensions continue to rise, Bitcoin is poised to retest the $64,000 to $65,000 liquidity band as investors retreat to the sidelines, Bitunix warned.
Frequently asked questions ❓
- Why is the price of Bitcoin falling today? Bitcoin tumbled towards $66,000 as rising geopolitical tensions between the US and Iran sparked a ‘risk-off’ sentiment across global markets.
- What impact have US tech stocks and the Nasdaq had on the crypto market? Despite Nvidia’s strong earnings, Bitcoin kept pace with the Nasdaq’s 300-point decline as investors moved away from high-growth assets.
- What is the impact of US-Iran tensions on global financial stability? Rising fears of a military conflict have fueled energy price volatility and inflation concerns, weighing on both stocks and digital assets.
- What are the key Bitcoin support levels to watch amidst this volatility? Analysts have suggested that Bitcoin could retest the crucial $64,000 to $65,000 liquidity band if market pressures continue.
