Bitcoin experienced a significant decline on Thursday morning, attributed to a surge in volatility following a war address by U.S. President Donald Trump regarding tensions with Iran. The cryptocurrency market saw over $386 million in liquidations as a result of the turmoil sparked by Trump’s speech.
In his address, Trump detailed the progress of the U.S. military operation known as Operation Epic Fury, claiming substantial victories, including the destruction of Iran’s navy and air force, as well as the elimination of key terrorist leaders. He emphasized the need for these actions to prevent Iran from obtaining nuclear weapons and asserted that the core objectives of the operation were nearing completion. Trump vowed to escalate the military campaign, stating, “We’re going to hit them extremely hard over the next two to three weeks. We are going to bring them back to the Stone Age where they belong.” His speech concluded with a promise of a safer and more prosperous America in the near future.
Following the address, Bitcoin, which hovered around $69,100 prior to the speech, plummeted to lows of $66,250 before partially rebounding to approximately $66,380, reflecting a 3.3% decrease on the day. The broader financial markets also felt the impact, with the S&P 500 and gold prices dropping nearly 2% and 4%, respectively. In contrast, crude oil prices surged from $98 to $107 per barrel, as uncertainties regarding the reopening of the Strait of Hormuz loomed.
The crypto selloff was further exacerbated by a notable reduction in institutional support, as spot Bitcoin exchange-traded funds (ETFs) recorded a dramatic outflow of $296.18 million last week, concluding a prior four-week streak of inflows. However, this week has seen a reversal of trend, with positive inflows of $13.35 million reported, despite a significant outflow the previous day.
Jeff Mei, COO of crypto exchange BTSE, indicated that risk assets are under pressure largely due to the lack of clarity regarding the Strait of Hormuz. Traders expressed skepticism on prediction market Myriad, where users now estimate a 74% chance that crude oil prices will reach $120 per barrel. Furthermore, there is a 54% likelihood that the average number of ships transiting the Strait remains below 15, reflecting ongoing uncertainty in the region.
The prevailing lack of confidence can be attributed to the tumultuous effects of the ongoing conflict, with concerns that even after hostilities cease, it may take considerable time to restore regional oil and gas production levels. This uncertainty could hinder economic growth in multiple countries, consequently putting additional downward pressure on crypto prices.
