Why Bitcoin is falling: BTC drops below $68,000 amid Trump's Iran warning and market selloff

With tensions in West Asia flaring up and uncertainty over inflation and interest rates intensifying, Bitcoin appears set to remain highly sensitive to global macro shocks.

• Bitcoin dips under $68K after Trump threatens Iran plants
• Over $1B in leveraged crypto wiped out in 24 hours
• Extreme fear grips markets amid rising geopolitical tensions

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Bitcoin tumbled below the $68,000 mark, triggering a sweeping liquidation cascade across crypto markets after US President Donald Trump threatened to "obliterate" Iran’s power plants, further firing up geopolitical tensions and rattling investor sentiment globally.

The sharp decline came within hours of Trump’s remarks, which marked a stark shift from his position just a day earlier, when he had suggested he was considering "winding down" the West Asia conflict. The sudden escalation in rhetoric sparked a broader risk-off move across financial markets, with cryptocurrencies caught in the crossfire.

More than $240 million in leveraged crypto positions were wiped out in just 60 minutes following the comments. Over a 24-hour period, liquidations surged past $1 billion, with approximately $980 million of that total stemming from bullish leveraged bets, as traders were forced to unwind long positions amid falling prices.

Bitcoin’s slide below $68,000 acted as the immediate trigger for this wave of forced selling. The move extended a broader three-day decline that followed a six-week high of nearly $76,000 reached earlier in the week. By Friday afternoon in New York, the cryptocurrency was trading near $70,000, little changed from a week earlier but significantly off recent highs.

The selloff has unfolded against a backdrop of mounting macroeconomic uncertainty driven by the West Asia conflict. Oil prices have spiked sharply, with Brent crude rising more than 40% amid disruptions to supply and fears of prolonged instability. Traders are increasingly concerned that higher energy costs could reignite inflationary pressures, complicating the policy outlook for the Federal Reserve.

Market pricing now reflects roughly a 50% chance that the Fed could raise interest rates by October, a shift that has weighed on risk-sensitive assets such as cryptocurrencies.

Analysts say investors are grappling with a difficult scenario in which rising oil prices could either push inflation higher or dampen economic growth.

Jake Ostrovskis, head of OTC trading at Wintermute, said the uncertainty is feeding directly into crypto volatility. “If the oil price increases are mainly inflationary, the Fed will avoid cutting. If growth slows, the central bank may have to cut, but market participants may flee risky assets,” he said, as cited by Bloomberg. "Either way, Bitcoin sits in the crossfire, headline volatility from the conflict is driving sharp intraday swings as the market reprices the macro path in real time," he noted.

Notably, despite a potentially supportive regulatory development earlier in the week, Bitcoin has struggled to regain momentum. The U.S. Securities and Exchange Commission unveiled new guidance clarifying that payment stablecoins, digital collectibles and digital commodities such as Bitcoin will not be classified as securities, a move expected to reduce regulatory burdens on the sector. However, the announcement failed to offset the broader deterioration in market sentiment.

That shift in sentiment has been stark.

The widely watched crypto Fear and Greed Index slipped back into “extreme fear” territory on Friday, according to data from CoinGlass, reversing earlier signs of recovery.

Analysts at Tagus Capital said in a note that “crypto market sentiment has deteriorated again,” adding that “the persistence of extreme fear suggests that positioning remains defensive, even as some market participants anticipate a relief rally.”

Institutional demand has also shown signs of weakening. US-listed spot Bitcoin exchange-traded funds recorded net outflows of $90.2 million on Thursday, following $163.5 million in withdrawals the previous day, marking a reversal from a recent streak of inflows.

The mechanics of the latest price move highlight the fragility of leveraged positioning in crypto markets. Liquidity has thinned notably below the $70,000 level, amplifying the impact of forced selling once key thresholds were breached. Analysts point to the $68,000 zone as a critical technical level, where clusters of long-term holder cost bases and prior trading activity converge.

A sustained break below that level could unleash an additional $608 million in long liquidations across major exchanges, potentially accelerating losses toward the mid-$60,000 range. At the same time, the market remains susceptible to sharp reversals. A move above $72,000 could trigger roughly $856 million in short liquidations, illustrating how concentrated leverage can amplify price swings in either direction.

Bitcoin has since stabilised near the $69,000 to $69,500 range, a key support zone identified by several analysts. However, broader technical indicators suggest caution. While short-term momentum signals such as the four-hour RSI indicate oversold conditions, longer-term charts continue to reflect a bearish structure, raising doubts about the durability of any near-term rebound.

Liquidation heat maps show significant liquidity clustered between $68,000 and $68,700, suggesting that further downside pressure could emerge if current support levels fail. A confirmed break below $69,000 could open the door to a deeper correction toward $65,500–$66,000.

Despite the recent turbulence, Bitcoin has held up relatively well compared to other assets during the West Asia conflict. The cryptocurrency remains up about 7% in March, while gold has declined roughly 13% after an extended rally that saw prices repeatedly hit record highs.

Some of Bitcoin’s earlier strength may have been driven by positioning dynamics, particularly traders closing out bearish options bets, which created buying pressure. Data from Deribit also indicates substantial downside protection remains in place, with around $1.6 billion in put options concentrated at the $60,000 level.

For now, say the cryptocurrency’s trajectory will remain closely tied to geopolitical developments and central bank policy signals. With tensions in West Asia flaring up and uncertainty over inflation and interest rates intensifying, Bitcoin appears set to remain highly sensitive to global macro shocks.