TLDR:
- Bitcoin dropped 3.8% to nearly $63,000 after joint US-Israel strikes on Iran rattled crypto markets on Saturday.
- The total crypto market shed $128 billion in minutes, triggering forced liquidations across digital asset exchanges.
- Bitcoin ETF inflows totaling $1 billion over three sessions last week are now the key metric traders are watching closely.
- Call options concentrated at $75,000 on Deribit suggest traders are positioning for a recovery ahead of the Fed meeting.
Bitcoin staged a tepid recovery on Sunday as geopolitical tensions rattled investor confidence. Joint US and Israeli strikes on Iran triggered a sharp sell-off on Saturday.
The total crypto market lost $128 billion in value within minutes. Traders are now watching for a confirmed bottom before committing to a stronger position.
Market Reacts Sharply to Geopolitical Escalation
Digital assets fell quickly after news broke of the joint US-Israel military campaign on Saturday. Bitcoin dropped as much as 3.8%, briefly touching nearly $63,000 during the session.
The rapid decline forced cascading liquidations across the broader crypto market. Data from CoinGecko confirmed the $128 billion wipe across the total crypto market capitalization.
Hayden Hughes, managing partner at Tokenize Capital, weighed in on the speed of the sell-off. “Over $128 billion wiped in minutes, forced liquidations cascaded, and once that selling exhausted itself, the reflex bounce was mechanical,” Hughes said.
Iran followed with counterstrikes targeting Israel, Qatar, the UAE, and Bahrain. Threats against US-linked bases in Iraq added further pressure to market sentiment.
Hughes also flagged Monday’s US equity market reopening as the defining moment for crypto. “The real price discovery happens Monday when US equity markets and Bitcoin ETFs reopen,” he noted.
“With missiles hitting Dubai, Iranian retaliation across the Gulf, and Strait of Hormuz closure risk, this is not a contained event,” he added. Last week saw $1 billion in inflows over three consecutive sessions in spot Bitcoin ETFs.
Hughes further warned that a reversal of ETF inflows could push Bitcoin below $63,000. Bitcoin ETF flows will be “the single most important number to watch,” he stated.
Put options worth $1.87 billion were concentrated at the $60,000 strike on Deribit. That concentration signals persistent demand for downside protection among traders.
Meanwhile, $529 million in contracts were traded on Polymarket around the timing of a US strike. That activity shows how closely crypto markets tracked the geopolitical situation throughout the weekend.
Traders Position for Recovery Ahead of Fed Meeting
Bitcoin rose as much as 2.2% to $68,196 on Sunday after Iran confirmed the death of Supreme Leader Ayatollah Ali Khamenei.
The bounce was short-lived, with prices pulling back to around $67,000 by 7:30 a.m. London time. Still, some market observers viewed the mild recovery as a constructive signal. Traders appeared to be looking past the Iran turmoil in early positioning.
Markus Thielen, head of research at 10x Research, pointed to growing optimism among options traders. “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,” Thielen said.
Bitcoin call options were concentrated around the $75,000 strike level on Deribit. Traders were also factoring in positioning ahead of the upcoming Federal Reserve meeting.
Richard Galvin, co-founder of Digital Asset Capital Management, offered a measured read on Saturday’s price action.
The US attack was, to a large extent, already factored in by traders who “used the weakness as a buy-the-dip or close-their-shorts opportunity,” Galvin said.
That behavior reflects a calculated response rather than panic selling. The coming sessions will clarify whether the recovery holds any real conviction.
