On June 13, Israel bombed Iran, and both sides have been exchanging bombs since then. As soon as this war broke out, the cryptocurrency market immediately shook three times —
First, panic sentiments skyrocketed. A couple of days ago, Bitcoin suddenly dropped by 5%, hitting a low of $105,000, and Ethereum fared even worse, plunging below $2,500 overnight, with the futures market all in the red. That day, over $1.1 billion was liquidated across the network, and 90% of those were long positions. Many in the group shared their liquidation orders, as if it were the end of the world.
Next, all the funds rushed into stablecoins, while altcoins were battered so badly that their mothers wouldn't recognize them. Have you seen how much net inflow USDT has had these past few days? It's all retail investors panicking and exchanging their coins for stablecoins seeking stability. High-leverage small coins plummeted the hardest, with some coins dropping as much as 30% in a day. But this situation is also strange; every time the market gets chaotic, stablecoins become a temporary safe haven, and once the storm passes, we need to see how the funds flow back.
Another key issue is that the surge in oil prices has derailed the Federal Reserve's interest rate cut plans. Iran is a major oil-producing country, and with the conflict, oil prices skyrocketed by 13%, with WTI crude nearing $78. When oil prices rise, inflation pressure increases. The market originally speculated that the Federal Reserve would cut interest rates this year, but with the current situation, it seems rate cuts will be postponed. If the Federal Reserve doesn't inject liquidity, the high-risk cryptocurrency market will definitely face a liquidity crunch, and we can expect more volatility ahead.
However, don't panic and cut losses. Seasoned investors have seen too many such scenes. During the Russia-Ukraine conflict, the crypto market also crashed, but eventually, it rebounded. Bitcoin is actually more useful in sanctioned places like Iran, as cross-border transfers are convenient, and it might even uncover new demand. At this moment, don’t blindly chase up or sell down; manage your positions well, wait for the market to digest the news, and preserving your capital is more important than anything else.
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