Bitcoin and the broader crypto market are going down today because of the rising tensions between the US and Iran. They are also plunging amid fears of market manipulation and the rising hacks in the industry.
BTC price dropped below $75,000, while the market capitalization of all tokens dropped to $2.4 trillion. Some of the top laggards in the crypto industry were tokens like Siren, Aave, Memecore, Zcash, and Mantle.
Crypto market crash triggered by geopolitical tensions
The main reason behind the ongoing crypto crash is the rising geopolitical tensions between the US and Iran.
Bitcoin and most altcoins jumped on Friday as the two sides maintained that the had reached an agreement to reopen the Strait of Hormuz.
The main issue was that, according to Iran, Trump’s statement contained some notable inaccuracies, including the fact that the blockade against Iranian ports would continue.
As a result, Iran announced that it was shutting down the Strait, pushing some ships to turn around. At the same time, the US announced that it had taken an Iranian ship, casting doubts on peace talks.
There is a major risk that the war between the US and Iran will resume, which is what Israel wants. Such a move will lead to a higher crude oil price and more market volatility.
RaveDAO crash and market manipulation
The other main reason why the crypto market crash is happening is the ongoing fear of market manipulation in the industry.
These fears escalated after the recent surge and downfall of RaveDAO, a cryptocurrency that moved from nowhere into one of the biggest players in the industry. It jumped from below $1 earlier this month and then surged to a high of $28, with the fully diluted valuation (FDV) hitting $24 billion.
RaveDAO then plunged to below $1 during the weekend as ZachXBT, a top online investigator, warned of potential market manipulation by insiders. He identified several suspicious addresses on top exchanges like Binance and Bitget.
At the same time, he warned that some of top cryptocurrencies were exhibiting the same characteristics. Some of these tokens were MemeCore, Pippin, Siren, and River. All these tokens emerged from nowhere and often experiences surges on low volume and open interest.
DeFi hacks are soaring
The crypto market is also happening as crypto hacks surge. Data compiled by DeFi Llama shows that hacks in the DeFi space have jumped to over $600 million this month, the highest level since February last year.
The latest hack happened during the weekend when hackers stole over $296 million from Kelp, a top player in the industry. While the real culprit has not been caught, analysts believe that the hackers are tied to Lazarus Group, the North Korean hacking organization.
The hack led to panic selling, with investors dumping over $5 billion from Aave, the biggest lending platform in the crypto industry. Its total value locked (TVL) has dropped from over $49 billion to $18 billion today. Aave is exposed to the hack and will suffer losses as the drained rsETH was used as collateral on the platform.
Additionally, the crypto crash is happening because Bitcoin has formed a bearish flag pattern on the three-day chart, raising concerns that the recent rally was a bear trap.