Following renewed tensions in the Middle East, global risk assets came under synchronized pressure, leading to a sharp decline in the crypto market. Bitcoin dropped approximately $1,600 within an hour on Wednesday, falling below $73,000 for the first time in several weeks; Ethereum retreated to $1,978, and XRP slipped to $1.28. The overall crypto market capitalization declined by 2.97% to $2.45 trillion.
Nearly $960 million in positions were liquidated.
This downturn was accompanied by large-scale leveraged position liquidations. Over the past 24 hours, approximately $958.8 million in positions across the entire crypto market were liquidated, with 93% being long positions. The concentrated liquidation of numerous leveraged positions within a short time frame amplified the intraday price decline.
The immediate trigger for the market decline was heightened investor concerns over escalating regional conflict following U.S. airstrikes on a military target in Iran on May 28. Cryptocurrency assets weakened alongside equities, prompting capital to flow into more defensive assets, while oil prices rose again due to renewed concerns over risks to the Strait of Hormuz.
Continuous outflows from ETFs weaken buying support
Before the impact of geopolitical tensions, the market was already weak. Prior to Wednesday’s decline, Bitcoin spot ETFs had recorded net outflows for seven consecutive trading days, totaling $1.88 billion. The report noted that this included a $1.29 billion dark pool sell order for BlackRock’s IBIT, further weakening institutional buying support.
Meanwhile, open interest in derivatives fell by 5.61%, indicating a simultaneous contraction of speculative positions. The combination of ETF outflows, reduced leverage, and heightened risk-off sentiment transformed what might have been a modest pullback into a more rapid decline.
$73,000 is a short-term level to watch
The market's primary focus remains on Bitcoin at the $73,000 level. If this level continues to be breached, the next potential test may be the $70,000 to $71,000 range.
Next, investors will primarily monitor two developments: whether the situation in the Middle East eases, thereby reducing pressure from oil prices and risk-off sentiment; and whether spot Bitcoin ETFs resume net inflows. If institutional capital resumes flowing back into the market, market absorption capacity is likely to improve. Until then, geopolitical developments may continue to exert a greater influence on the crypto market than typical trading-level factors.