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- Bitcoin and Ethereum declined after renewed U.S.-Iran tensions triggered a broader risk-off market reaction.
- Shrinking stablecoin supply is reducing crypto market liquidity and adding downside pressure.
- Analysts warn Bitcoin could test $59,700 or even $56,550 unless it breaks above $63,600.
Bitcoin and Ethereum extended their losses after geopolitical tensions in the Middle East escalated once again, sending investors toward traditional safe-haven assets and pushing oil prices sharply higher. The latest selloff followed comments from U.S. President Donald Trump, who declared that the ceasefire with Iran was effectively over after fresh U.S. military strikes.
The renewed conflict rattled financial markets, with cryptocurrencies joining a broader risk-off move. Bitcoin dropped to around $61,700, while Ethereum slipped below $1,740 as traders reacted to rising uncertainty and the possibility of prolonged regional instability.
Trump Signals End of Iran Ceasefire
Speaking during the NATO summit, Trump dismissed the ceasefire agreement with Iran, saying he no longer intended to negotiate with Tehran. His remarks came after the U.S. military launched strikes on more than 80 targets following Iran’s attacks on three commercial vessels in the Strait of Hormuz, including ships linked to Qatar and Saudi Arabia.
Iran swiftly condemned the military action, accusing Washington of violating the ceasefire through renewed attacks, sanctions, and continued military operations. The exchange has intensified concerns over energy supplies, driving oil prices up by roughly 6% and increasing pressure on risk-sensitive assets such as cryptocurrencies.
Stablecoin Supply Signals Weakening Market Liquidity
Geopolitical uncertainty is only part of the story. Crypto market liquidity has also been showing signs of weakness as the supply of stablecoins continues to contract.
Historically, expanding stablecoin supply has supported stronger Bitcoin performance by providing fresh capital for crypto markets. When liquidity grows, Bitcoin has typically posted stronger returns over one- and three-month periods. However, shrinking stablecoin balances have often coincided with reduced gains and weaker investor demand.
Current stablecoin supply has declined by roughly 4.4% from its recent peak. While that contraction remains far smaller than the sharp decline seen during the 2022 bear market, analysts are closely watching whether the trend continues. A prolonged reduction in liquidity could increase selling pressure across digital assets.
Analysts Watch Key Bitcoin Support Levels
Technical indicators also suggest caution.
Crypto analyst Ali Martinez believes Bitcoin remains trapped inside a descending channel on the four-hour chart after failing to break resistance near $63,600. If bearish momentum persists, Bitcoin could retreat toward $59,700, with $56,550 emerging as the next significant support level.
However, the outlook could quickly improve if buyers regain control. A decisive move above $63,600 backed by strong trading volume would invalidate the current bearish pattern and potentially signal the beginning of a broader recovery.
Also Read: US-Iran Talks Spark Market Rally: Bitcoin Jumps While Oil Hits 125-Day Low
Bitcoin and Ethereum now face pressure from both geopolitical uncertainty and tightening crypto liquidity. While recent losses remain relatively modest compared to previous bear markets, investors are closely monitoring developments in the Middle East alongside stablecoin market trends.
For now, the combination of global conflict, rising oil prices, and weakening market liquidity suggests volatility is likely to remain elevated, leaving crypto traders focused on whether key support levels can hold in the days ahead.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
