Tensions between the US and Iran have escalated again, increasing risks around the Strait of Hormuz and significantly strengthening risk aversion in the cryptocurrency market. In the past 24 hours, leveraged positions were liquidated exceeding $930 million, Bitcoin briefly fell below $73,000, and the previous rebound based on ceasefire expectations was reversed.
More than $930 million cleared in 24 hours
The report, citing Coinglass data, stated that over $851 million in leveraged long positions were liquidated in the past 24 hours. This chain of liquidations pushed Bitcoin down to around $72,800, with major tokens such as ETH and SOL also declining, experiencing a single-day drop of approximately 4%.
The total market capitalization also shrank significantly. The article states that, under the impact of a new round of geopolitical risks, the total market capitalization of the crypto market evaporated by approximately $80 billion, falling to its lowest level since mid-April.
The ceasefire announcement failed to boost risk appetite.
Although the market received news of a 60-day extension of the ceasefire, risk assets did not rebound significantly. The report suggests this indicates traders did not view a de-escalation as a certainty in the short term, and the market's pricing in related news was clearly cautious.
Aside from crypto assets, traditional financial markets performed relatively better. The S&P 500 and Nasdaq indices remain near all-time highs, and gold and silver prices also remain high, indicating that funds continue to favor more mature or safe-haven assets.
Inflation data weakens expectations of interest rate cuts
On the macro level, the continued rise in US PCE inflation data for April further dampened market sentiment. The report noted that April's PCE rose 3.8% year-on-year, the highest level since mid-2023; core PCE was 3.3% year-on-year, also higher than the Federal Reserve's 2% target.
Against this backdrop, market expectations for interest rate cuts continue to cool. The article states that investors had initially hoped for easing policies to support risk assets this year, but the latest inflation data has challenged this assessment, putting the crypto market under dual pressure from geopolitical factors and interest rate expectations.
Structurally, this decline reflects more than just short-term sentiment fluctuations. When geopolitical conflicts, rising inflation, and the relative strength of traditional assets occur simultaneously, highly volatile assets are more likely to experience capital outflows, and leveraged positions are more likely to be liquidated in a concentrated manner.
