The cryptocurrency market experienced a sharp downturn on Sunday morning following U.S. military strikes on three Iranian nuclear facilities. Ethereum, a leading cryptocurrency by market capitalization, led the selloff, plunging 7.4% as investors reacted to the geopolitical tensions.
According to data from CoinGlass, the market saw liquidations exceeding $701 million, with a significant portion—$618.69 million—comprising long positions. The overall market capitalization of cryptocurrencies fell to $3.25 trillion, marking a 4.4% decline, as reported by CoinGecko.
Impact on Major Cryptocurrencies
Ethereum faced the most substantial losses among the top 20 cryptocurrencies, with liquidations amounting to $296 million in the past 24 hours. Of this, $269 million were long positions. Bitcoin, while not immune, experienced a more modest decline, with liquidations reaching $152 million, including $125 million in long positions.
Other cryptocurrencies also suffered, with Cardano dropping 7.1%. Bitcoin’s price held relatively steady, decreasing by 1.4% to $102,418.
Market Sentiment and Predictions
The sentiment on decentralized prediction platforms reflected growing bearishness. On Myriad, a prediction market platform, more than 70% of users now anticipate Ethereum’s price to fall below $2,000 by the year’s end. This shift highlights investor anxiety amid escalating geopolitical tensions.
“Moon to $3000 or dip to $2000” market shifted from near even odds to over 70% expecting a dip below $2,000 by year-end.
U.S. Military Action in Iran
In a statement on Truth Social, President Donald Trump confirmed the U.S. military had conducted “very successful” attacks on Iranian nuclear sites. “Iran’s key nuclear enrichment facilities have been completely and totally obliterated,” he announced in a follow-up address.
The operations involved B-2 bombers targeting the Fordo uranium enrichment facility, while Natanz and Isfahan sites were struck by submarine-launched Tomahawk missiles, according to U.S. Defense Department officials.
This military action represents a significant escalation in the ongoing tensions between the U.S. and Iran, with Israeli officials confirming their coordination with the U.S. in planning the operation.
“ANY RETALIATION BY IRAN AGAINST THE UNITED STATES OF AMERICA WILL BE MET WITH FORCE FAR GREATER THAN WHAT WAS WITNESSED TONIGHT,” Trump warned.
Iran’s Response and Global Implications
Iran’s foreign minister, Abbas Araghchi, warned of “everlasting consequences” and affirmed that Iran “reserves all options” to protect its sovereignty. The potential for retaliation has elevated concerns over the security of the Strait of Hormuz, a critical chokepoint for global oil shipments.
Prediction markets on Polymarket have responded to the heightened tensions. The odds of Iran closing the Strait of Hormuz before July jumped to 46%, a significant increase from 9% the previous day. Similarly, the likelihood of this occurring by the end of the year rose to 57%, up from 31%.
Odds of Iran closing the Strait of Hormuz before July: 46%, up from 9%.
Historical Context and Future Outlook
This development echoes past geopolitical crises that have impacted global markets. Historically, conflicts in the Middle East have led to volatility in both traditional and digital asset markets. The current situation underscores the interconnectedness of geopolitical events and financial markets.
Looking ahead, analysts suggest that the crypto market’s reaction may serve as a barometer for investor sentiment regarding geopolitical risks. The potential for further military engagement or retaliatory actions by Iran could continue to influence market dynamics.
Experts advise investors to remain vigilant, as the situation remains fluid. The possibility of diplomatic interventions or escalations could significantly alter the current trajectory.
As the world watches closely, the implications of these developments will likely extend beyond the cryptocurrency market, affecting global economic stability and international relations.
