Bitcoin (BTC) Price Falls to $66,000, Altcoins in Free Fall as Crypto Liquidations Surge to $850 Million

Cryptocurrencies plunged on Friday as risk aversion in traditional markets spread to digital assets amid rising geopolitical risks.

In a quick afternoon move lower during US trading, Bitcoin (BTC) fell below $66,000 after breaking through $71,000 just hours earlier. At press time, Bitcoin was back up to $66,700, down more than 5% in the last 24 hours.

Ether (ETH), the second-largest cryptocurrency by market cap, fell as much as 12% to $3,100 before a slight bounce limited the decline to 8%.

Smaller cryptos suffered even greater losses in the panicked action. The broad-based CoinDesk 20 Index (CD20) fell nearly 10%, with Cardano's ADA, Avalanche's AVAX, Bitcoin Cash (BCH), Filecoin (FIL), and Aptos (APT) falling 15-20%.

The decline triggered the largest leverage loss in a month, unwinding about $850 million in leveraged derivatives trading positions across digital assets, data from CoinGlass shows. About $770 million of these positions were long positions that bet on rising prices and were surprised by the sudden decline.

The drop came as stock markets fell during the US trading session as fears of a widening conflict in the Middle East grew as US authorities warned that Iran could be preparing for a major attack on Israel.

Treasury bonds and the U.S. dollar index (DXY) rose sharply as traders flocked to hedge, while major U.S. stock indexes S&P500 and Nasdaq 100 fell 1.7% an hour before the close. Gold, long considered a safe-haven asset, rose above $2,400 to a new all-time high before giving back gains, while oil rose 1%.

Digital asset investment firm Ryze Labs, formerly Sino Global Capital, said in a Friday commentary that it expects “near-term market weakness” for crypto assets due to the upcoming tax season. However, it maintained a more constructive long-term outlook, anticipating easing for the asset class as policymakers slow quantitative tightening and potentially adjust monetary policy to ease U.S. government debt rollover.

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