Bitcoin briefly slipped below $80,000 on May 12 as global markets reacted to President Donald Trump's warning that the US-Iran ceasefire was "on life support" and the latest US inflation figures. After testing the $82,000 level on Monday afternoon, the leading cryptocurrency showed weakness, plunging to $80,900. Although it quickly recovered to trade above $81,000 in early Tuesday hours, it could not hold that level and dipped below the threshold again around 4:00 AM EDT. From there, Bitcoin began a gradual decline that erased nearly all gains made in the previous 48 hours. By 12:54 PM EDT, Bitcoin had hit a daily low of $79,820 before quickly rebounding to $80,500.
The 24-hour drop of 1.6% dragged Bitcoin's market capitalization down to $1.61 trillion.
Stalled Negotiations and Regional Stability
Trump, after receiving what he called an "unacceptable" proposal from Iran, reiterated that Tehran is keeping the US waiting and seems uninterested in reaching a deal. This latest deadlock strengthens hawks in Washington who advocate a return to full-scale combat operations. However, a return to conflict would ensure the Strait of Hormuz — where traffic has dwindled to a minimum since the conflict began — remains closed. As Aramco's CEO warned, this means oil markets and prices will not stabilize until at least 2027. This puts the Trump administration and the Republican Party in a bind, as higher oil prices for the rest of the year are likely to hurt their chances in the November midterm elections.
US Inflation Hits 3.8%, Dashing Rate Cut Hopes
Rising geopolitical tensions in the Middle East were not the only factor weighing on markets. The release of the US Consumer Price Index (CPI) for April, which showed inflation rising to 3.8% compared to the forecasted 3.7%, dampened hopes for a rate cut. Energy prices — particularly gasoline — were the main drivers. The Producer Price Index (PPI) report, due on May 13, is the next key catalyst, as it will show whether these price pressures continue to increase at the manufacturing level.
$280 Million in Liquidations, Long Positions Hit Hard
Over the past 24 hours, long Bitcoin positions worth $57 million were liquidated, compared to $7.5 million in short positions. In total, nearly $280 million in leveraged positions were liquidated across the cryptocurrency market, with long positions accounting for approximately $232 million. Markets are now waiting for the PPI report and further geopolitical developments to gauge the next direction.