Bitcoin Falls Below $76,000 as Traders Close Long Positions and Upward Momentum Weakens
On Tuesday morning, bitcoin experienced a sharp $2,000 drop, falling below the $76,000 support level just three hours after reaching a peak of $78,000.
Key Takeaways
- On Tuesday morning, bitcoin saw a sudden $2,000 drop that wiped out its recent weekend gains.
- The abrupt market volatility led to nearly $350 million in liquidations across the cryptocurrency space.
- US and Iranian negotiators are expected to continue tense diplomatic talks for several more days.
Military Clashes Derail Weekend Rally
Bitcoin’s characteristic volatility returned on Tuesday morning, with a sharp decline in value wiping $2,000 off its price in just three hours. The number one cryptocurrency plunged below the psychologically important $76,000 support level, sharply retreating from its previous high of just over $78,000. This sudden downward reversal effectively neutralised the bullish momentum built up over the weekend, which had been driven by reports of a breakthrough in diplomatic talks between the United States and Iran.
While bitcoin peaked slightly above $77,800 on Sunday amid rumours and then consolidated above $77,500, reports of overnight military clashes between US and Iranian forces in the Strait of Hormuz triggered a sharp decline in the cryptocurrency. As Bitcoin.com News previously reported, the incident, whose significance was downplayed by US officials, caused bitcoin to fall to $76,500, where it remained until 6:15 a.m. Eastern Standard Time.
A subsequent two-wave recovery allowed bitcoin to reclaim the $77,500 resistance level and then rise to an intraday high of $78,003 by 10:30 a.m. Eastern Standard Time. However, the rally proved short-lived, as a sharp sell-off triggered a steep fall to an intraday low of $75,740. As a result of the rapid decline, bitcoin lost 2% over 24 hours and almost 3% over the month. With only a few days left until the end of May, the cryptocurrency now appears to be on track to record its fourth month of negative returns this year.
While Washington firmly characterised its military strikes as a necessary act of self-defence, Tehran categorically rejected that version. Iran’s Foreign Ministry condemned the operations as a gross violation of the existing ceasefire agreement, warning of imminent retaliation. Nevertheless, even with the threat of escalation looming, high-level negotiations between the two sides continued, and regional observers predicted that they would last for several more days.
Bitcoin’s volatile price action triggered $100 million in leveraged position liquidations, with liquidated long positions accounting for $73 million of the total. Across the broader digital asset market, total liquidations approached $350 million.
See also: "Deutsche Bank Platform Wants to Launch a Swedish Krona-Backed Stablecoin"
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