Bitcoin, known as a high-risk asset, plummeted 2.64% to US$62,858 during Asian trading hours after US President Donald Trump announced plans to raise global tariffs to 15%, a move that unsettled investors and weighed on equities and other higher-risk assets.
The slide came amid broad risk-off sentiment across global markets, causing Bitcoin to lose more than 19% in February, its worst monthly performance since June 2022. The price later recovered, but remained well below its high of $126,198 recorded in early October last year.
After the US and Israel began striking targets across Iran on Saturday, Bitcoin dropped as much as 3.8% to $63,038, while Ether, the second-largest token, slid by 4.5% to $1,836. Roughly $128 billion in market value was erased across digital assets in the immediate aftermath of the news, according to data from CoinGecko.
Bitcoin, the world’s most popular cryptocurrency, recovered to about $68,000 on Sunday, erasing most of its war-driven losses, shortly after Iranian state media reported Supreme Leader Ayatollah Ali Khamenei wad killed in air strikes.
According to brokers, Bitcoin is testing support from $66,000 to $65,729. Although concerns have eased, some traders forecast a dip to as low as $53,000 if Bitcoin fails to hold above $60,000, particularly as Iran moves to restrict the vital Strait of Hormuz shipping lane.
With a fluid outlook as developments change rapidly in the Middle East and uncertainty hangs over the US economy, the Explainer previews the forecast for crypto prices during the rest of the year.
WHICH FACTORS AFFECT CRYPTO PRICES?
Nirun Fuwattananukul, chief executive of Binance TH by Gulf Binance, said Bitcoin prices are primarily driven by three factors: liquidity conditions, macroeconomic confidence and technical structure.
“The first two factors influence all risk assets, and both remain uncertain. The Federal Reserve is not expected to cut interest rates within the next six months, and there is still limited visibility on the policy stance of the incoming Fed chair,” he told the Bangkok Post.
“This leadership transition adds another layer of uncertainty. On the macroeconomic front, the US outlook remains mixed — inflation has moderated but growth signals are uneven. In addition, trade policies and tariffs continue to create uncertainty.”
From a technical perspective, Bitcoin has lost its prior structural uptrend that began in 2024 and is currently trading in what Mr Nirun characterised as a bear market, having corrected nearly 50% from its peak.
Historically, after such structural breakdowns markets require time to rebuild confidence. In previous cycles, Bitcoin’s bottoming and consolidation phases have typically lasted at least six months before a sustainable recovery emerged, he said.
Given these uncertainties for liquidity, macro conditions and technical structure, investors are advised to adopt a cautious and disciplined approach, focusing on risk management rather than aggressive positioning, noted Mr Nirun.
Rachael Lucas, crypto analyst at BTC Markets, said despite the “digital gold” narrative, Bitcoin continues to trade as a risk asset.
“When macro fear spikes, capital rotates towards traditional safe havens. Bitcoin is not there yet,” she said.
WHY DID THE PRICE REBOUND SHORTLY AFTER KHAMENEI’S DEATH?
According to CoinGecko, the world’s biggest independent cryptocurrency data aggregator, cryptocurrencies recovered roughly $32 billion in market value by Sunday morning after Iran confirmed Khamenei was killed during a military strike carried out by the US and Israel.
These developments are in some ways reminiscent of 2022, when Russia’s full-scale invasion of Ukraine pushed oil prices higher and inflation surged.
“Bitcoin is the only large liquid asset trading 24/7, so it absorbed all the selling pressure that would normally spread across equities, bonds and commodities,” said Hayden Hughes, managing partner at Tokenize Capital.
“The real price discovery happened on Monday when US equity markets and Bitcoin exchange-traded funds reopened. With missiles hitting Dubai, Iranian retaliation across the Gulf, and the risk of a Strait of Hormuz closure, this was not a contained event.”
According to Markus Thielen, head of research at 10x Research, traders generally don’t expect the Iran conflict to have major negative economic consequences, and demand for upside Bitcoin calls has clearly picked up in recent days.
Traders are instead positioning themselves for the upcoming Fed meeting, he said.
At the same time, Khamenei’s death created a sudden power vacuum in Iran. He was in power for more than 35 years and held ultimate authority over the country’s military, foreign policy and nuclear programme.
Meanwhile, Iran has a long history with crypto, particularly when it comes to using it to circumvent sanctions.
Traders appear to be betting the leadership turmoil increases the odds of de-escalation. Moreover, the likelihood of Iran shutting the entire Strait of Hormuz is considered low, noted analysts.
“The Strait of Hormuz has never been blocked despite previous wars — it cannot be blocked. It is too wide and well protected,” said CoinDesk energy analyst Anas Alhajji on X.
WHY DOES A FED RATE CUT MATTER, AND WHAT DOES THE FUTURE HOLD?
According to Mr Nirun, an interest rate cut generally supports Bitcoin and other investment assets because it increases liquidity and lowers the opportunity cost of holding riskier assets.
When rates are high, investors can earn attractive returns from cash or bonds. When rates fall, those safer returns decline and investors tend to look for higher-growth opportunities such as equities and digital assets, he said.
Lower rates also ease financial conditions and can weaken the US dollar, both of which historically support Bitcoin prices. However, the overall impact still depends on the broader economic backdrop.
“If cuts happen during severe economic stress, markets may remain volatile,” said Mr Nirun.
The Fed has been on a rate-cutting trajectory since late 2024. However, US economic data remains mixed, with inflation moderating but not fully anchored, and the labour market cooling but not breaking. This has prompted markets to believe the Fed is unlikely to deliver additional cuts in the first half of this year.
“Markets may expect more cuts later this year, but policymakers will need clearer evidence that inflation is sustainably under control before moving meaningfully lower,” he said.
Trump has publicly stated he expects the next Fed chair to pursue further rate cuts. Whether or not that materialises, such political expectations introduce uncertainty into the policy outlook and could influence market sentiment before actual decisions are made, said Mr Nirun.
Tony Sycamore, an analyst at IG Australia, said whether Bitcoin holds at its current level could determine whether prices stabilise.
“Conversely, a fall below the $58,000 to $60,000 support zone would likely open the door to a deeper pullback,” he wrote in a research note.