Bitcoin's price dropped more than 3.5% over 24 hours, losing over $2,000 and wiping out nearly $1 billion in derivatives positions. The sell-off came as the US conducted strikes on an Iranian military site and shot down four Iranian drones near the Strait of Hormuz — a move US officials called 'measured, defensive, and intended to maintain the ceasefire,' per Reuters. Iran retaliated by striking a US base in Kuwait, with the IRGC stating 'aggression will not go unanswered.' Oil prices surged 5% on the escalation, which analysts view as pushing investors away from risk-on assets like crypto.
US-Iran escalation hits risk assets
The strikes mark a serious flare-up in a region already on edge. Oil's 5% jump is the kind of shock that tends to drain capital from speculative corners of the market. Bitcoin, still treated by many traders as a risk asset, took the brunt. The roughly $1 billion in liquidations across derivatives exchanges hit long positions hardest — a brutal squeeze for anyone who bet the rally would continue through the geopolitical noise.
The timing isn't great for the industry, either. Markets were already jittery after a string of regulatory moves and exchange outages this month. Now a hot war — albeit one the US insists is 'measured' — is competing for traders' attention.
Record ETF outflow adds to pressure
Adding to the pain: a massive $1.3 billion block sale of 29 million shares of BlackRock's IBIT spot Bitcoin ETF went through, marking the single largest daily outflow from US Bitcoin ETFs on record. The sale is huge even by ETF standards — it's not a drip, it's a dump. Whether it was a single institutional unwind or coordinated selling isn't clear, but the effect was immediate: more supply hitting a market already spooked by geopolitics.
The ETF outflow compounded the price drop, making the recovery slower than it might have been in a normal risk-off day. Bitcoin briefly touched session lows below the key $55,000 level before bouncing slightly, but it remains under pressure.
Markets now watch for further retaliation from Iran or the US, and whether oil stays above $90 a barrel. If it does, risk assets including crypto could face more headwinds. No one is calling a bottom just yet.
