Bitcoin slides under $77,000 as Iran threat fuels inflation fears

Bitcoin (BTC) fell below $77,000 on Monday, pressured by renewed inflation fears after former President Donald Trump signaled potential U.S. military action against Iran. The digital asset slid to $76,848, a decline of 1.47% in the past 24 hours, as traders priced in a more hawkish Federal Reserve.

"The liquidation wave was heavily skewed towards leveraged bulls, with long positions accounting for nearly 89% of the $657.9 million flushed in the last 24 hours," data from Coinglass shows. The single largest liquidation order was an ETH/USDT contract worth $28.49 million on Bitget.

The sell-off was broad, with the total crypto market capitalization dropping 0.93% to $2.65 trillion. Ethereum (ETH) saw $256.83 million in liquidations and fell below $2,120, while Bitcoin recorded $180.89 million. The 30-year Treasury yield climbed to 5.13%, its highest since 2007, increasing the opportunity cost of holding non-yielding assets like Bitcoin.

With prediction markets like Polymarket showing a 94% probability of the Federal Reserve holding rates steady through July, Bitcoin remains vulnerable to macro shocks. Traders are now watching for fresh catalysts, including U.S. Producer Price Index (PPI) data on Thursday and Nvidia's earnings, to gauge the next direction for risk assets.

The slide in digital assets comes as geopolitical tensions in the Middle East drive a risk-off mood across global markets. Former President Donald Trump's warning of potential strikes on Iran pushed oil prices higher, fanning concerns about a resurgence in inflation that could compel the Federal Reserve to maintain or even increase interest rates.

This macro-driven volatility has left short-term Bitcoin holders particularly exposed. On-chain data from Binance Research, citing Glassnode, indicates that the market value to realized value (MVRV) for short-term holders is below 1, meaning recent buyers are, on average, underwater on their investment. This dynamic can accelerate sell-offs as investors with losses are forced to liquidate positions.

Despite the sell-off, long-term holders appear unfazed. Nearly 60% of the Bitcoin supply has not moved in over a year, and the balance of BTC on exchanges remains near a six-year low, according to the Binance Research report. This suggests that while leveraged traders are being flushed out, conviction among long-term investors remains high.

The broader cryptocurrency market felt the impact. Solana (SOL) led declines among major altcoins, falling 11.22% over the past week to $84.94. The widespread liquidations highlight the current fragility of a market heavily influenced by macroeconomic headwinds and geopolitical uncertainty.

This article is for informational purposes only and does not constitute investment advice.