$930M Liquidated From Crypto Markets as $BTC Tumbles to $72.8k Amidst US-Iran Tensions

Flaring geo-political tensions around the Strait of Hormuz have wiped out more than $930 million in leveraged crypto positions over the past 24 hours, dragging $BTC below $73,000 for the first time since April 13 and erasing the ceasefire optimism that had propped markets up all month.

With crypto prices floundering and TradFi assets showing strength, sentiment towards the industry has swung deeply pessimistic. Crypto-natives are once again questioning their exposure to the industry, which has been dramatically outperformed by traditional asset classes over the past year. 

Meanwhile, April PCE inflation has risen to its highest level since June 2023, suggesting that the rate cuts that investors were holding out for may not come to fruition.

$80B Wiped from Total Crypto Market Cap Meltdown

After a relief rally that instilled belief back into the hearts of the crypto faithful, a violent move to the downside has scuppered traders’ mounting optimism. Reignited tensions in the US-Iran conflict erased $80B from crypto’s total market cap, which has slid to its lowest level since mid-April.

According to Coinglass data, over $851M dollars worth of leveraged long positions have been liquidated in the last 24 hours alone. Cascading sales pushed $BTC back below $73,000, dragging majors like $SOL and $ETH down 4%.

Crypto’s Fear & Greed index, a popular measure of sentiment, has tumbled back to 32, suggesting that market participants may be rotating out of risk-on holdings into more resilient assets.

Strong strength in the face of choppy market conditions, $SOL ETF inflows have remained positive, if only just. Inflows have remained flat so far this week, with yesterday’s session attracting a mere $557k in fresh capital, based on SolanaFloor data.

Despite receiving welcome news of a ceasefire deal, markets are not pricing in peaceful resolution. Where previous announcements of peace talks and ceasefires have breathed confidence into markets throughout this conflict, crypto prices have remained flat in response to a reported 60-day extension to the US-Iran ceasefire.

Crypto Sentiment Flounders as TradFi Assets Soar

Adding to the average crypto trader’s woes, traditional asset classes continue to outperform their magic internet money. TradFi indexes like the S&P 500 and the Nasdaq are all camped near record highs, and both gold and silver remain elevated. 

Meanwhile, crypto continues to trend downwards, reviving theories that the liquidation events of October 10 inflicted lasting damage to long term crypto market structure.

Unsurprisingly, the mood has soured. One trader announced he needs a real job now that his main hustle is cooked. Another, a decade deep in the space, called it crazy to spend ten years here only to watch it end like this.

Will Incoming Inflation Support Ailing Prices?

The Fed's preferred inflation gauge just came in hot. April PCE rose to 3.8% year-over-year, the highest since May 2023, while core PCE hit 3.3%, the highest since October 2023. The central bank's top metric is now running at nearly double its 2% target.

That guts the rate-cut thesis crypto bulls have leaned on all year. Markets are now pricing roughly even odds that the Fed's next move is a hike rather than a cut, with the funds rate parked at 3.50% to 3.75% under new chair Kevin Warsh.

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