Recently, Israel's military strikes against Iran and the subsequent counterattacks have triggered geopolitical tensions, causing a risk-off sentiment in global financial markets, especially around June 13, when a noticeable decline occurred in the crypto space. This article will use the latest data, simple metaphors, and analysis to help newcomers understand the causes of this decline, market mechanisms, and coping strategies. 'Follow for updates'
📉 Market performance overview
Bitcoin drop: Following Israel's airstrikes on Iranian nuclear facilities, Bitcoin fell approximately 3% to the range of $104K–$105K in the short term.
Ethereum and other major coins: Ethereum once dropped about 8–9% to near $2,500, while Solana, Dogecoin, and others saw declines between 7% and 10%.
Total market capitalization evaporated: Within 24 hours, the entire crypto market saw an evaporation of over $20 billion in market capitalization, accompanied by liquidation events exceeding $1 billion in the derivatives market.
Subsequent rebound signal: As concerns over the conflict eased and ETF funds continued to flow in, Bitcoin stabilized above $105K after a few days, demonstrating some resilience.
⚙️ Mechanisms of decline and underlying logic
Risk aversion driven: Geopolitical conflicts trigger a sharp drop in investors' risk appetite, leading them to withdraw from high-risk assets (including cryptocurrencies) and move towards traditional safe-haven assets (like gold and USD cash).
Leverage and liquidation magnification: Most capital in the market has leveraged positions, and even a slight price drop triggers forced liquidation, further amplifying selling pressure; statistics show that during this event, the amount of liquidation in the derivatives market exceeded $1 billion within 24 hours.
Institutional liquidity considerations: Although long-term institutional buying intentions remain unchanged, some funds and trading strategies may temporarily reduce positions or adjust allocations in the face of macro uncertainties during short-term volatility.
Market psychology resonance: The media's frequent reporting of escalating conflicts and technical analysts warning of 'risk-off selling' exacerbate market panic, forming a self-reinforcing downward momentum.
🧠 Simple metaphors
'Rollercoaster in a Storm': Just like a sudden storm causes a rollercoaster in an amusement park to pause and shake violently, passengers (investors) instinctively want to jump off (sell), but when the storm calms, the ride resumes (prices rebound).
'Leverage Domino': In a tall building (market), a slight tremor can trigger the entire building's safety mechanism (liquidation), causing more tremors; thus, a small decline can create a chain reaction.
'ETF Faucet': ETF funds flow in like a continuous small stream, slowly injecting support into the market even after the storm, like sunlight breaking through after a storm, allowing for a quicker overall recovery.
💡 Strategies for beginners
Stay calm and manage risks well
When encountering sudden geopolitical or macro events, do not rush to sell everything; set reasonable stop-loss or take partial profits.
Understand your holding ratio and the range of volatility you can tolerate to avoid locking in losses due to panic actions.
Diversify allocations to reduce leverage risk
If using leverage, carefully control the leverage ratio; ensure there is enough margin to avoid forced liquidation during sudden events.
Assets can be diversified across Bitcoin, stablecoins, and traditional assets to smooth overall volatility.
Pay attention to market signals but do not follow blindly
Mainstream news and on-chain data (such as capital flow, position changes, derivatives open interest, etc.) can help assess market sentiment but should be combined with your own strategy.
Do not make decisions solely based on 'panic selling' rumors; it is advisable to review multiple analyses and wait for confirmation signals before acting.
Use volatility to find opportunities
For those with a long-term positive outlook on crypto assets, consider gradually buying the dips after confirming that risks have temporarily eased; seize the cost advantages brought by short-term declines.
When there are reliable signals, consider participating in rebounds with small positions, but still pay attention to ongoing market volatility risks.
Continuous learning and tool usage
Learn basic technical analysis indicators (such as support and resistance levels, volume changes, funding rates, etc.) to help make more rational judgments.
Utilize stop-loss orders and alert tools (such as price alerts, on-chain monitoring) to automate strategy execution and reduce emotional interference.
🔮 Key points for further observation
Conflict developments and easing: If geopolitical situations show signs of easing or escalation, they will again impact short-term market volatility; continue to monitor authoritative media and analysis reports.
ETF and institutional dynamics: ETF capital inflow data and institutional asset allocation adjustments are important signals for assessing long-term market trends.
Macroeconomic environment: Central bank policies, inflation data, U.S. stock market trends, and other factors are correlated with the crypto market and should be considered comprehensively.
On-chain capital flow: Pay attention to the movements of large wallets and the inflow and outflow of exchanges to assess short-term supply and demand changes.
The recent decline in the cryptocurrency market triggered by the Israel-Iran conflict is a typical example of geopolitical risks impacting high-risk assets. However, the crypto market shows some resilience: after the panic, forces like ETF and institutional buying provide support for prices. For beginners, the key is to understand market mechanisms and psychology, manage risks well, diversify investments, and remain rational amidst volatility to avoid unnecessary losses while seizing opportunities at the right moment.
Reference and further reading
CoinCentral: 'Israel-Iran Airstrikes Sends Crypto Markets into Freefall'
FXLeaders: '$1.2B Crypto Liquidation as Israel-Iran Conflict Roils Markets'
Ambcrypto: 'Crypto in war crisis? Not Bitcoin – Here’s how BTC is holding up'
UEEX Blog: 'Crypto Markets React to Israel-Iran Tensions With Increased Volatility'