Bitcoin recovered to $63,000 on Thursday after dropping over 3% during the previous 24 hours on U.S.-Iran military clashes. The cryptocurrency's recovery occurred as tensions in the Middle East remained high after U.S. and Iranian forces exchanged fire for the second consecutive day. Coinglass data showed over $52 million in liquidations as the geopolitical shock rippled through crypto derivatives markets, while Brent crude oil fell under $76 per barrel after peaking above $80 on Wednesday.
Bitcoin Recovers Above $63,000 After Brief Drop Below $61,500
Daily chart data show that hours after tumbling below $61,500, bitcoin recovered and held above $62,000 until around 9:45 p.m. Eastern time on Wednesday. A sudden sell-off briefly pulled the price just underneath $61,700, but by midnight, the cryptocurrency was back above $62,000 as a relief rally ultimately pushed it past $63,000 by 3:50 a.m.
At the time of writing, bitcoin traded just above $62,700, a gain of 1% over the last 24 hours. The marginal gain lifted bitcoin's market capitalization to nearly $1.26 trillion and helped maintain its positive start to July. While bitcoin later oscillated between $62,500 and $63,000, the recovery marked a reversal from the sharp decline triggered by Middle East tensions.
Liquidations Reach $52 Million as Broader Markets Show Mixed Response
On the derivatives market, bitcoin's Thursday price action resulted in suppressed liquidations compared to 24 hours earlier. Coinglass data show bitcoin liquidations for both long and short positions nearly topped $52 million, compared to $65 million in long positions alone wiped out a day earlier.
Although the sudden clash between U.S. and Iranian forces initially jolted global markets, the latest escalation had a muted impact on equities. Key indices in Asia and Europe defied the geopolitical headwinds to close in the green, while U.S. markets posted modest gains at the time of writing.
Energy markets followed a similar trajectory, with Brent crude oil retreating from its Wednesday peak of just over $80 per barrel to settle below $76. Some analysts note that bitcoin's initial 3% slide below $62,000 was not an isolated cryptocurrency decline, pointing out that gold also took a hit on the headline news.
Analysts Split on Bitcoin's Response to Geopolitical Tensions
On social media, market sentiment surrounding the latest U.S.-Iran escalation and its impact on bitcoin is split into two distinct camps: macro-focused pragmatists who view bitcoin as a temporary casualty of a stronger dollar, and structural bulls who are using the dip to emphasize the long-term sovereign hedge thesis.
Some analysts argue that the market narrative is that energy price spikes trigger hawkish Federal Reserve anxiety, causing the dollar to absorb safe-haven flows and temporarily squeezing risk assets, including bitcoin. However, because derivative funding rates have reset to neutral and bitcoin managed to rapidly reclaim the $63,000 level during the European session, many structural bulls are calling the brief drop a bear trap.
Structural bulls argue that the broader macro backdrop, marked by escalating conflict and rising global debt, ultimately strengthens the thesis for fixed-supply assets once the initial liquidity shock wears off.
FAQ
What caused bitcoin to drop over 3% before recovering to $63,000?
Bitcoin dropped over 3% on Thursday due to U.S.-Iran military clashes, with U.S. and Iranian forces exchanging fire for the second consecutive day. The cryptocurrency briefly fell below $61,500 before recovering and ultimately pushing past $63,000 by 3:50 a.m.
How much was liquidated in bitcoin derivatives during the price drop?
Coinglass data showed over $52 million in liquidations for both long and short bitcoin positions during Thursday's price action. This compared to $65 million in long positions alone that were wiped out a day earlier.
How did other markets respond to the U.S.-Iran tensions?
Key indices in Asia and Europe closed in the green despite geopolitical headwinds, while U.S. markets posted modest gains at the time of writing. Brent crude oil retreated from its Wednesday peak of just over $80 per barrel to settle below $76. Gold also took a hit on the headline news.
