Bitcoin’s early-March rally has fully reversed, with the price dropping below the psychological $66,000 level to hit a multi-week low of $65,505. Escalating geopolitical tensions and persistent weakness in U.S. equities drove the downturn.
Geopolitical Risks Intensify, Fueling Safe-Haven Flight
The standoff between the U.S. and Iran continues to worsen. Iran rejected a 15-point ceasefire proposal from Washington, sending Brent crude above $108 per barrel and exacerbating global inflation fears. Meanwhile, the Trump administration repeatedly extended its deadline for military strikes against Iran, leaving the Strait of Hormuz a no-sail zone and casting a shadow of global recession. Analysts warn that a potential capture of Kharg Island could represent a significant “black swan” risk for global markets.
Given the administration’s history of executing bold military orders on weekends when traditional exchanges are closed, bitcoin traders are bracing for a volatile 48 hours ahead.
Wall Street Plunge Drains Crypto Markets
While Asian and European markets remained largely flat, Wall Street saw a sea of red. The Nasdaq tumbled more than 400 points (nearly 2%), while the S&P 500 and Dow Jones fell 1.52% and 1.62% respectively. Bitcoin’s strong correlation with equities dragged it down 4.5% in a single day, wiping out nearly $10 billion from its market cap and pulling the total crypto market capitalization to $2.36 trillion. The expiry of $14 billion worth of options on Deribit added downward pressure.
Bitcoin’s Q1 Performance Dismal, ‘Digital Gold’ Narrative Tested
From its March 17 high of $76,013, bitcoin has dropped 14%, though it may still end the month with a modest loss of under 5%. However, since the Jan. 1 opening of $90,000, the asset has lost more than 25% of its value year-to-date, making it one of the worst-performing risk assets. The “digital gold” narrative that once shielded bitcoin from macro shocks is now being severely questioned.
Some traders believe the drop is not over, with a possible test of $60,000 if geopolitics worsen. Others argue that a quick rebound is possible once tensions ease, given the underlying scarcity from the halving.