The price of Bitcoin has experienced a significant downturn, dropping below $85,000 and reaching $84,564, its lowest closing price since December 19. This decline follows a brief surge where Bitcoin approached $90,400, illustrating the asset”s volatile nature in recent trading sessions.
This sharp decline, exceeding 5%, reflects broader market concerns, including geopolitical instability and the Federal Reserve”s recent policy announcements. The overall cryptocurrency market suffered alongside Bitcoin, with major assets like Ethereum, Cardano, XRP, and Solana all seeing losses of six percent or more.
Heightened geopolitical tensions have contributed to the current market stress. Reports indicate that the United States has dispatched a second warship to the Middle East, while Iran is preparing for military exercises near the Strait of Hormuz. These developments have intensified market volatility, prompting defensive positioning among investors.
Moreover, the Federal Reserve maintained interest rates between 3.50% and 3.75%, with officials indicating no immediate plans to lower rates. They noted a stabilizing labor market and persistently high inflation, which further dampened market sentiment.
Analyst BLAZEY described the situation as a “classic leverage flush,” highlighting that many over-leveraged long positions—some with ratios around 2.2:1—were liquidated rapidly, contributing to the selloff. Approximately $150 million in liquidations occurred within an hour, exacerbated by low liquidity in the market.
Despite the turmoil, Bitcoin“s daily trading volume surged to around $49 billion as forced selling escalated. The total market capitalization for Bitcoin fell to approximately $1.69 trillion, marking a 5.2% decrease from the previous day.
Liquidation data from CoinGlass revealed that nearly $319.25 million in liquidations affected top crypto assets over the past 24 hours, with long positions accounting for more than $307.59 million. This imbalance highlighted the concentration of bullish sentiment prior to the price drop.
Interestingly, Bitcoin has declined despite new highs in stock markets and commodities such as gold and silver. Analysts at JPMorgan linked the recent drop in Bitcoin to shifts in short-term capital flows and overall market sentiment. Notably, Bitcoin exchange-traded funds (ETFs) have seen substantial outflows, with net withdrawals recorded in seven of the last eight trading days, totaling $278 million this month.
