The ongoing geopolitical tensions between the United States and Iran have raised significant concerns in the financial markets, particularly for cryptocurrencies. With Bitcoin currently trading around $67,400, investors remain apprehensive as the prediction market Polymarket estimates a 61% chance of a U.S. military strike on Iran in the coming weeks.
Bitcoin’s recent trading dynamics have seen it drop nearly 33% from prices exceeding $100,000 during the previous Israel-Iran conflict last year. Amidst the looming threat of conflict, Bitcoin and the broader cryptocurrency ecosystem have lost about half their market value since October 2025, following a staggering $19 billion liquidation event that instigated the downward trend.
The concept of Bitcoin as a hedge against geopolitical risk is being challenged. Historical prices have demonstrated that during heightened tensions, such as during Israel’s “Operation Midnight Hammer” strike in June 2025, Bitcoin suffered significant declines when the U.S. escalated its involvement. This time around, analysts caution that market conditions are even weaker, with fragile investor sentiment and increased sell-offs contributing to a bearish trend.
Recent on-chain data from CryptoQuant is revealing troubling signs, with the Short Term Holder SOPR dipping below 1.0, indicating recent buyers are selling at a loss. Additionally, the short-term Sharpe ratio has faltered, reflecting deteriorating risk-adjusted returns. In total, approximately $80 million in long positions have been eradicated as Bitcoin fell from $70,000.
Key Support Levels Under Pressure
Analysts are alert to crucial support levels flanking Bitcoin’s current price point, particularly between $65,729 and $66,000. A daily close beneath this threshold could catalyze further declines, propelling prices toward the $60,000 mark. Experts like Sebastian Serrano, CEO of the crypto exchange Ripio, warn that if bearish momentum continues post-strike, Bitcoin could plummet as low as $53,000.
Market expert Greg Magadini from Amberdata indicated that the dust hasn’t settled yet, as a “true bottom requires ownership to change hands,” creating uncertainty regarding who the next potential buyers might be. Julio Moreno, head of research at CryptoQuant, advised that geopolitical disturbances would maintain pressure on Bitcoin and Ethereum in the existing bear market climate.
Looking Ahead
As the situation unfolds, some analysts argue that opportunistic whales might capitalize on the market dip. Former BitMEX CEO Arthur Hayes pointed to liquidity dynamics within Treasury markets that could eventually provide support for cryptocurrencies when tensions diminish. Diplomatic discussions in Oman scheduled for later this week could play a pivotal role in shaping market sentiment, potentially setting the stage for a rebound should conflict be averted.
Ultimately, while Bitcoin has historically been viewed as a refuge during times of uncertainty, recent events tweak that narrative. The market’s response to political developments remains delicate, and investors are urged to stay vigilant as conditions continue to evolve.
