Compass Investments

– Bitcoin is holding around $67,818 at the time of writing, but it has lost 1.94% overnight and 8.11% over the past seven days. That’s a significant weekly decline for an asset that was quoted above $100,000 just a couple months ago.

The situation with Ethereum is no better. ETH is trading at $2,034, which is noticeably below the important $2,100 mark, and has shown a 10.15% drop over the week. Such numbers are starting to raise questions about whether this downtrend has a continuation.

Solana is down to $85.66, showing a drop of 8.42% in seven days. XRP is at $1.37, down 7.29% for the week. Even BNB has lost 8.70% over the same period. This is not an individual coin’s problem. The entire top 10 looks weakened, and only stablecoins remain stable – as is usually the case in times of instability.

Liquidations data echo this picture. Over 173,000 traders have dropped out in the last 24 hours. According to Coinglass, the total amount of forced closures reached $393 million, of which $307 million were longs. The market expected growth, but it turned out to be the opposite.

What’s the reason for the collapse?

Over the weekend, Iranian Revolutionary Guards announced a complete shutdown of the Strait of Hormuz if the United States launches threatened strikes on Iranian energy facilities, as reported by Reuters. This was in direct response to Trump’s threat to wipe out Iranian power plants if Tehran does not allow unimpeded passage through the strait within 48 hours. This dramatic escalation comes just a day after he announced his intention to end the four-week conflict.

The Strait of Hormuz is critical. About 20% of the world’s oil flows through it. Blocking the strait would inevitably cause a spike in energy prices and create serious difficulties for global supply chains. Market players do not like uncertainty, and now there is plenty of it.

the situation is aggravated by the fact that the reaction has affected not only cryptocurrencies.

Gold and silver, traditionally considered a safe haven in times of geopolitical turmoil, are also actively selling off. This indicates more than just a reallocation of risk. Investors may be hoarding cash, closing margin positions, or simply withdrawing capital from anything that is not the U.S. dollar.

Adding to the geopolitical noise is the macroeconomic environment, which does not bring relief. Hopes for an imminent reduction of the key rate look less and less realistic. As inflation data remains volatile and the Fed is slow to act, the prospect of cheaper liquidity – the fuel that fueled growth in 2024 – is receding. No monetary easing means tighter conditions, and such conditions have historically been unfavorable for speculative assets, including cryptocurrencies.

Alternative.me’s Bitcoin Fear and Greed Index is at 8, which is extreme fear.

Last week it was at 23, also in the extreme fear zone, but the drop to 8 in seven days shows how quickly sentiment deteriorates. It was also at 8 a month ago, which means it’s back to the same psychological lows without any noticeable recovery in the interim.