The crypto crash accelerated on Sunday, with Bitcoin plunging below $100,000 for the first time since May 8. It has moved into a correction after falling by over 10% from its highest point this year.
Altcoins have had a deeper crash, with popular tokens like Sei, Injective, Ondo, Ethena, and Jasmy falling by over 10% in the last 24 hours. The total crypto market cap has plunged by over 4% in the last 24 hours to $3 trillion, while liquidations soared by 154% to over $1 billion.
Crypto Crash Accelerates After Trump Bombs Iran
The crypto market crash gained steam on Sunday as traders reacted to the elevated geopolitical tensions in the Middle East. This crisis escalated after Donald Trump launched a barrage of bombs at three nuclear targets in Iran, risking a prolonged war in the region.
Iran and its Houthi leaders have vowed to retaliate against the US and Israel. Indeed, Iran continued launching missiles towards Israeli targets on Sunday.
Bitcoin and other altcoins plunged because of the significance of this attack. Historically, risky assets like stocks and crypto plunge when there is a major black swan event. For example, they all plunged after the recent Liberation Day, in which Trump announced sweeping tariffs.
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Crypto prices also crashed after the COVID-19 pandemic and after collapse of top crypto projects like FTX and Terra.
The other reason is that the crisis in the Middle East will likely lead to higher crude oil and shipping costs. Data shows that Brent crude oil has jumped by over 30% in the last few weeks, and analysts worry that it could jump to $100 soon.
Higher oil and shipping costs will make it harder for the Federal Reserve and other central banks to cut interest rates as inflation rises. Bitcoin and other altcoins do well when the Fed is cutting rates.
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Key Macro Data Ahead
Looking ahead, the main catalyst for the crypto market will be Iran’s response to Trump’s bombing. A sign of limited response and talks could boost these assets.
A major risk is if Israel and the US strike Iranian oil refineries and terminals, and its energy plants. Such a move would push the crypto market much lower.
The other top catalysts will be the upcoming US macroeconomic data, like the GDP report on Thursday and the latest US personal consumption expenditure (PCE) data.
Judging by history, there is a likelihood that Bitcoin and crypto prices will rebound once the geopolitical tensions ease.
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