Iranian situation fluctuates: Bitcoin drops below $75k, then rebounds, over 110k traders liquidated

April 8, 2026, the United States and Iran reached a conditional ceasefire, opening a brief window of geopolitical détente. However, as the ceasefire period was repeatedly extended, deep-seated contradictions on key issues such as control of the Strait of Hormuz, Iran’s nuclear program pathway, and frozen assets remained unresolved.

By May, the game intensified suddenly. On May 7, the US and Iran engaged in brief clashes in the Strait of Hormuz, with maritime friction rapidly escalating. The US quickly launched the “Freedom Plan” operation, imposing a maritime blockade on Iranian ports, with no signs of easing. Meanwhile, the Iranian Revolutionary Guard continued to organize merchant ships to pass, asserting actual control over the strait.

On May 23, a dramatic turn occurred. Iranian Foreign Ministry spokesperson Baghaei was appointed as the spokesperson for Iran’s negotiating team with the US. On the same afternoon, U.S. Eastern Time, Trump posted on social media claiming that the US-Iran agreement was “basically reached.” However, just one day later, the tone shifted sharply: Trump instructed negotiators “not to rush into an agreement.” The Iranian Foreign Ministry quickly responded that Iran and the US had reached consensus on most issues, but “this does not mean an agreement is imminent.” The gap in mutual understanding was fully exposed in the current memorandum of understanding involving the strait navigation and nuclear negotiations framework.

Why Has the Strait of Hormuz Become a “Macro Black Swan” in Crypto Markets?

The Strait of Hormuz is a critical chokepoint for about 20% of global oil transportation. When this energy artery is shadowed by military conflict, the transmission mechanism is clear and profound: geopolitical conflict pushes oil prices higher, rising oil prices reinforce inflation expectations, inflation expectations drive up risk-free interest rates, ultimately squeezing valuation space for all risk assets, including cryptocurrencies.

In mid-May, as the US-Iran conflict escalated, international crude oil prices surged past $110 per barrel. According to Gate data, by May 20, Bitcoin’s 24-hour decline exceeded 5%, dropping below $77,000. The transmission chain was particularly complete in this event: oil prices soared → inflation expectations rose → US Treasury yields hit a temporary high of 4.85% → funds systematically withdrew from risk assets.

This transmission mechanism directly questions Bitcoin’s narrative as “digital gold” for safe-haven. Data shows that Bitcoin’s 30-day correlation coefficient with the Nasdaq 100 index once rose to 0.72 in mid-May, indicating that under systemic market pressure, Bitcoin is currently more akin to a risk asset than a traditional safe haven.

What Happened When Bitcoin Fell Below $75k?

On May 23, influenced by reports of possible US military strikes on Iran, market risk sentiment rapidly deteriorated, and the crypto market collectively plunged. According to Gate data, Bitcoin experienced intense volatility from May 23 to 24: dropping sharply from around $77,000, approaching the $74,000 level.

Coinglass data shows that during this decline, about $400 million in long leveraged positions were forcibly liquidated within just 10 minutes. Bitcoin fell from a 24-hour high of $77,434 to $74,606, a decline of 3.62%. Over the 24-hour period, total liquidations across the network exceeded $500 million, with over 120k traders wiped out. Many traders using high leverage long positions were fully liquidated amid panic.

How Did the “Basically Reached” Agreement Trigger a Violent Rebound and Liquidation of Over 110k Positions?

The market reversal occurred in the early hours of May 24. Trump officially announced on Truth Social that the US-Iran agreement was “basically reached.” Following this news, Bitcoin was immediately pushed from $74,000 to $76,600.

This brief V-shaped reversal did not stabilize the market but instead triggered textbook-style short covering. Coinglass data shows that within 30 minutes of the rapid price surge, about $180 million of short positions were forcibly liquidated. The buying pressure from short covering further pushed up the price, creating a chain reaction. In the past hour, total liquidations reached $103 million, with short positions accounting for nearly $90 million, causing over 110k traders to lose their entire positions.

As of May 25, based on Gate data, Bitcoin was at $77,500, up 0.7% in 24 hours. After rebounding from around $74,200 over the weekend, the market is now in a typical “post-dip recovery” phase, testing the $77,500 resistance zone.

Fragile Market Sentiment and Structural Divergence

Market sentiment remains in a highly uncertain and fragile zone. The Crypto Fear & Greed Index has fallen to around 30, in the “fear” zone, well below the previous neutral level of 48.

Unlike past internal risk events in crypto markets (such as the Terra collapse in 2022 or FTX incident), the current decline is driven by external macro shocks. This means there has been no direct credit crisis among trading counterparties or de-pegging of stablecoins. Centralized exchanges’ Bitcoin reserves have only decreased slightly, by about 1.2%. However, the high-risk exposure in the leverage market—especially the dense accumulation of long positions between $73,000 and $74,000—means that any geopolitical “black swan” could trigger large-scale margin calls. Coinglass data indicates that if Bitcoin falls below $73,800, over $1.29 billion in long leverage positions could be at risk.

Core Variables and Potential Paths for the Next Phase of the Game

The key variable now is whether this memorandum of understanding can truly translate into an actionable ceasefire and strait navigation agreement. The main points of disagreement are concentrated in three areas: control rights over the Strait of Hormuz, the disposal method of Iran’s enriched uranium stockpile, and the unfreezing of $25 billion in frozen Iranian assets.

Multiple sources suggest that the current draft agreement is only a framework consensus. Iran’s Foreign Ministry explicitly states that “details of the nuclear issue are not discussed at this stage,” indicating a gap with the US’s expectation of a comprehensive resolution. Trump’s demand to maintain the maritime blockade before formal signing further increases uncertainty about the agreement’s implementation.

Three scenarios are worth monitoring: if a 60-day ceasefire and reopening of the strait are phased in, market risk appetite could gradually recover, with Bitcoin potentially finding a new equilibrium between $77,000 and $80,000; if negotiations break down or military conflict reignites, oil prices could surge again, pushing risk assets into a second bottom, with the dense leverage long positions in the $73,000–$74,000 range becoming the focal point of liquidation storms; if the agreement remains volatile and prolonged, the market will enter a “news-driven” high-volatility mode, with short-term moves driven by the wording of each negotiation statement.

Summary

The recurring Iran situation has become the most prominent geopolitical variable in the 2026 crypto market. From Bitcoin falling below $75k to violent rebounds, from over 120k long liquidations to 110k shorts covered, the crypto market has experienced a complete long-short squeeze in the past 72 hours. The Strait of Hormuz, as the gateway of global energy supply, directly influences crypto asset pricing through the transmission chain of inflation expectations and risk-free rates.

The current US-Iran negotiations remain highly uncertain. While the basic framework of the agreement has taken shape, core disagreements—control of the strait and nuclear pathway—have yet to be bridged. For leveraged traders, this means that every negotiation statement in the coming weeks could trigger sharp directional volatility. Market pricing is shifting from technical analysis to geopolitical narratives, where the security status of the Strait of Hormuz may have become the most influential yet unpredictable variable in current crypto valuation models.

FAQ

Q: Where is the largest liquidation concentration when Bitcoin drops below $75k?

According to Coinglass’s leverage liquidation heatmap, there is a dense zone of over $1.29 billion in long leverage positions near $73,800. A fall below this level would trigger a chain reaction of liquidations.

Q: What is the transmission path of the Iran situation to the crypto market?

Geopolitical conflict pushes oil prices higher → rising oil prices reinforce inflation expectations → US Treasury yields increase → risk-free rates rise → valuation pressure on cryptocurrencies and other risk assets. This is a complete multi-step pricing transmission chain.

Q: If the US-Iran agreement is ultimately reached, what does it mean for Bitcoin?

If the 60-day ceasefire and Strait reopening are implemented, market risk appetite could recover. However, the specific implementation details—especially control over the strait and nuclear pathway—will determine the extent and sustainability of the recovery.