Key Highlights
- U.S. military strikes near the Strait of Hormuz caused Bitcoin to plunge beneath the $73,000 threshold.
- Crypto traders faced $958 million in forced liquidations within a 24-hour period, with long positions accounting for 93-94% of losses.
- Bitcoin spot ETFs experienced $733.4 million in net withdrawals on May 27, including $527.8 million from BlackRock’s fund alone.
- Ondo cryptocurrency plummeted more than 11% in a single session, extending its decline to 25% from its May 22 high.
- Overall cryptocurrency market valuation decreased 1.66% to reach $2.43 trillion, erasing approximately $40 billion in value.
Military action by the United States against Iranian targets created turbulence across financial markets on Thursday, with cryptocurrency assets experiencing particularly severe price declines. The convergence of escalating international conflict and substantial institutional withdrawal created intense downward pressure on digital asset valuations.
Geopolitical Turmoil Drives Bitcoin Price Collapse
Bitcoin’s price reached approximately $72,978 during Asian trading sessions on Thursday. This represented a 3.4% decline from the previous day and marked a 6.3% decrease over the week.
The catalyst for this downturn emerged when U.S. Central Command executed strikes against Iranian military infrastructure positioned near the strategically vital Strait of Hormuz. Military forces also intercepted four attack drones launched by Iran toward a civilian merchant vessel. According to official U.S. statements, these operations were defensive measures designed to preserve the recently established ceasefire.
Tehran retaliated by launching strikes against the military installation from which the American operations originated, according to statements from the Islamic Revolutionary Guard Corps. Kuwait simultaneously announced its forces were countering incoming missile and drone activity within its territory.
During a cabinet session, President Donald Trump emphasized that the waterway would continue operating freely. “It’s international waters,” he stated. “The strait’s going to be open to everybody.”
This development shattered the cautious optimism regarding ceasefire stability that had been supporting market sentiment in recent weeks. Bitcoin had maintained support above $74,000 despite previous geopolitical headlines from the region. Thursday’s military escalation breached that critical support level.
Ethereum declined 4.2% to settle at $1,976, falling beneath the psychologically important $2,000 threshold. Solana experienced a 3.5% drop to $80.57, while XRP decreased 3.6% to $1.28, and Dogecoin retreated 3.2% to $0.0979. Hyperliquid remained the sole major token maintaining weekly gains, despite experiencing a 4.5% daily decline.
Institutional Withdrawal Intensifies Market Pressure
Withdrawals from institutional investment vehicles amplified the market downturn. Bitcoin spot exchange-traded funds registered cumulative net outflows totaling $733.4 million on May 27. BlackRock’s Bitcoin ETF alone experienced withdrawals of $527.8 million during this single trading session.
These institutional exits directly fueled the liquidation avalanche that followed. Bitcoin positions represented $386 million of the forced closures, while Ethereum accounted for $246 million. The most substantial individual liquidation involved a $15.34 million Bitcoin position on the Hyperliquid platform.
According to CoinGlass analytics, the 24-hour period saw $958.8 million in aggregate liquidations affecting 167,706 individual traders. Approximately 93% of these forced exits involved long positions — speculators who had anticipated price appreciation.
Alternative Cryptocurrencies and Technical Market Analysis
The aggregate cryptocurrency market capitalization contracted 1.66% to $2.43 trillion, eliminating roughly $40.91 billion in value. This positions the market precisely at the 0.618 Fibonacci retracement level measured from the late March bottom to the May peak of $2.72 trillion.
Ondo emerged as one of the session’s worst performers, declining over 11% intraday. This extended the token’s total retreat to 25% from its May 22 pinnacle of $0.47.
Examining the Bitcoin technical chart reveals prices consolidating between the 0.5 Fibonacci level at $73,871 — already breached — and the 0.618 level at $71,765. Notably, selling volume accompanying recent declining candles showed reduction compared to earlier phases of the selloff, potentially indicating diminishing downside momentum near current levels.
A confirmed daily close beneath $71,765 would establish a pathway toward the $68,766 support zone. Conversely, a sustained recovery above $75,978 would reestablish the trajectory toward $78,584.
Thursday’s rapid liquidation sequence indicates traders were overwhelmingly positioned for upside continuation when market dynamics reversed abruptly.
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