Bitcoin Price Plummets Amid Geopolitical Tensions and Economic Uncertainty
Bitcoin’s price has taken a hit, falling below $105,000 on Friday after a 4% drop over the past two days. This decline reflects a broader market sentiment shift driven by escalating tensions in the Middle East and renewed trade uncertainty. Over $1.15 billion in liquidations have swept through cryptocurrency markets as investors adopt a more risk-averse stance.
Geopolitical Risks Weigh on Bitcoin
The price of Bitcoin has faced a three-day slide, reaching a low of $102,664 on Friday. The escalating conflict between Israel and Iran is a key factor fueling this correction. Reports suggest that Israel was preparing to launch an attack against Iran, raising concerns about a wider regional conflict. This has led to the withdrawal of diplomats and the authorization of voluntary departures for military families from the Middle East.
Early Friday morning, reports emerged of Israeli airstrikes targeting Iran’s nuclear program and military objectives. Iran has vowed a strong response, further escalating tensions. These geopolitical risks have triggered risk-off flows in the market, negatively impacting riskier assets like Bitcoin. Massive liquidations have occurred, with over $448 million in Bitcoin liquidations alone and a total of $1.15 billion across cryptocurrency markets in the last 24 hours.
Trade Uncertainty Adds to Market Woes
Bitcoin started the week positively, buoyed by news of a potential trade agreement between the U.S. and China. BTC surged over 4% on Monday, closing at $110,263, just 1.56% below its all-time high. However, this optimism proved short-lived as President Trump threatened new tariffs on Wednesday.
Trump indicated he would impose unilateral tariffs and notify trade partners within two weeks, ahead of a July 9th deadline. This announcement injected uncertainty into the market, overshadowing the positive sentiment from earlier trade talks. The resulting caution among investors has led to a decline in the prices of riskier assets.
U.S. Macroeconomic Data Fails to Provide Support
Important U.S. macroeconomic data was released this week. The Consumer Price Index (CPI) for May was published on Wednesday, revealing slightly softer inflation data than expected. The core month-over-month (MoM) reading, closely watched by the Federal Reserve, suggested that inflation may be cooling. This could reduce the urgency for interest rate cuts.
Later on Thursday, moderate Producer Price Index (PPI) numbers further supported the idea that inflationary pressures are not re-accelerating. While this data could potentially support a bullish environment for Bitcoin in the coming weeks, it has not provided immediate support to the cryptocurrency.
Glimmers of Optimism Remain
Despite the increased risk aversion, demand for BTC from public companies remains strong. Mercurity Fintech Holding Inc. (MFH) announced plans to raise $800 million to establish a long-term Bitcoin treasury reserve.
GameStop also announced plans to raise $1.75 billion through a private offering of 0.00% Senior Convertible Notes due in 2032. The company later priced its expanded private offering at $2.25 billion, with an option to sell an additional $450 million. GameStop had added 4,710 BTC between May 3rd and June 10th, following a $1.3 billion convertible note offering in March.
The interest from companies in Bitcoin indicates a growing acceptance of BTC as a strategic asset, increasing its legitimacy and potentially boosting long-term adoption.
Institutional demand for Bitcoin has also remained robust this week. U.S. spot Bitcoin ETFs recorded a total inflow of $1.07 billion through Thursday, breaking a two-week streak of outflows.
Is Bitcoin Out of the Woods?
Bitcoin’s price failed to retest its all-time high of $111,980 after a strong rally on Monday and experienced a slight dip until Wednesday. The correction continued on Thursday, closing below the daily support at $106,406. On Friday, it extended its losses and rebounded after retesting the 50-day Exponential Moving Average (EMA) at $102,447.
If BTC closes below the 50-day EMA at $102,447, it could extend the decline to retest the psychologically important level of $100,000.
The Relative Strength Index (RSI) has fallen below its neutral level of 50, indicating increasing bearish momentum. The Moving Average Convergence Divergence (MACD) indicator showed a bearish crossover on Thursday, issuing a sell signal and indicating a downward trend.
However, if BTC recovers, it could extend the rally to retest its daily level of $106,406.
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