On Tuesday morning, Bitcoin experienced a sharp flash crash of $2,000, falling below the $76,000 support level just three hours after peaking at $78,000.
Important points:
- Bitcoin suffered a $2,000 flash crash on Tuesday morning, erasing recent weekend gains.
- Sudden market fluctuations caused approximately $350 million in liquidations across the crypto industry.
- U.S. and Iranian negotiators are expected to continue tense diplomatic negotiations for several more days.
Military clash derails weekend rally
Bitcoin’s trademark volatility was triggered once again on Tuesday morning, when a violent flash crash wiped out $2,000 in value in just three hours. The number one cryptocurrency fell below the psychologically important support level of $76,000, strongly rejecting its previous high of just over $78,000. This sudden reversal effectively neutralized the bullish momentum that had built over the weekend, fueled by reports of a landmark diplomatic deal between the US and Iran.
Bitcoin peaked at just above $77,800 on Sunday’s rumors before consolidating above $77,500, but reports of overnight military exchanges between U.S. and Iranian forces in the Strait of Hormuz sent the cryptocurrency plummeting. As Bitcoin.com News previously reported, the incident, which was downplayed by US authorities, triggered Bitcoin’s fall to $76,500, a threshold that remained until 6:15 a.m. ET.
Two subsequent waves of gains allowed Bitcoin to reclaim the $77,500 resistance level and rise to an intraday high of $78,003 by 10:30 a.m. ET. However, the rally was short-lived as the sharp decline forced a sharp rebound to the day’s low of $75,740. The rapid decline saw Bitcoin drop 2% in 24 hours and nearly 3% for the month. With only a few days left in May, the cryptocurrency appears to be on track to post its fourth negative return of the year.
The US government categorically classified the military attack as an act necessary for self-defense, but the Iranian government vehemently rejects this statement. Iran’s Foreign Ministry condemned the operation as a serious violation of the continuing ceasefire agreement and warned of imminent retaliation. However, despite the looming threat of an escalatory spiral, high-level talks between the two countries continue, with regional observers predicting they will continue for several more days.
Bitcoin price movements resulted in $100 million in leverage liquidations, of which $73 million was due to the extinguishment of long bets. Total market liquidations across the broader digital asset space approached $350 million.
