Bitcoin briefly dipped below the $80,000 mark on Tuesday after President Trump warned that the U.S.-Iran ceasefire deal was “hanging by a thread” and the latest U.S. inflation data came in hotter than expected, extinguishing hopes for an imminent rate cut.
Geopolitical Tensions and Sticky Inflation
On May 12, Trump told reporters that Iran’s latest proposal was “unacceptable,” accusing Tehran of stalling and showing no genuine interest in a deal. The renewed standoff raised the specter of a prolonged blockade of the Strait of Hormuz — shipping traffic through the vital waterway has already shrunk to a trickle since the conflict erupted. Saudi Aramco’s CEO warned that oil markets may not stabilize until at least 2027, putting the Trump administration in a political bind: surging oil prices could hurt Republicans’ chances in the November midterm elections.
At the same time, the U.S. Bureau of Labor Statistics reported that the April Consumer Price Index (CPI) rose to 3.8%, above the 3.7% consensus estimate. Energy costs — particularly gasoline — were the main driver. The data effectively killed any remaining expectation that the Federal Reserve would begin cutting interest rates this year. Markets are now looking to the Producer Price Index (PPI) report due May 13 for clues on whether price pressures are broadening.
Bitcoin Breaks $80K, $232M in Longs Liquidated
Bitcoin had briefly touched $82,000 on Monday afternoon but quickly reversed course. After a failed attempt to reclaim $81,000 early Tuesday, the cryptocurrency slipped below $80,000 again. By 12:54 p.m. ET, it hit an intraday low of $79,820 before bouncing back to around $80,500. The 1.6% decline over 24 hours pulled Bitcoin’s market cap down to $1.61 trillion.
The volatility triggered heavy liquidations across crypto derivatives. In the past 24 hours, nearly $280 million worth of leveraged positions were wiped out, with long positions accounting for approximately $232 million. Bitcoin-specific liquidations totaled about $57 million in longs, compared to just $7.5 million in shorts.
Market Outlook: All Eyes on PPI
The triple blow of geopolitical uncertainty, sticky inflation, and delayed rate cuts has darkened the mood in crypto markets. Analysts warn that if Friday’s PPI report reveals continued energy cost pass-through to producers, the Fed will have even less room to pivot, potentially dragging Bitcoin toward the $75,000 support level.
However, some traders see buying interest near $79,000, and the flush of leveraged longs may have partially cleared the overhang. Any easing in Middle East tensions or a softer PPI reading could help Bitcoin reclaim the psychologically important $80,000 threshold.