Bitcoin fell below $78,000 as escalating U.S.-Iran tensions sparked a significant crypto market selloff. According to Bitstamp data, the top cryptocurrency dropped to a session low of $77,614 before recovering and consolidating around $78,000. The slide continues a downward trend that has seen the asset shed approximately $4,000 since tapping $82,000 on May 14, bringing its 24-hour losses to 3.2% and effectively wiping out gains made since the start of the month. The cryptocurrency's plunge brought its market capitalization down to $1.56 trillion, representing a drop of more than $40 billion from the $1.6 trillion mark recorded Thursday. Latest data shows Bitcoin dropped to $78,131 on Saturday, down 1.3% in 24 hours and 2.7% on the week, marking its lowest level since May 7.
The crypto market selloff was triggered by rumors of potential U.S. and Israeli military strikes against Iranian facilities, with The New York Times reporting that any escalation would likely trigger a two-pronged U.S. military strategy: intensified, high-precision airstrikes targeting Iranian command-and-control infrastructure, alongside highly specialized ground operations designed to neutralize and retrieve enriched nuclear material secured deep within subterranean facilities at Isfahan. Tehran has immediately drawn a line in the sand, vowing "to deliver a well-deserved response to any aggression," while Israeli defense officials have shifted to wartime footing, with domestic media outlets reporting that the Israel Defense Forces are actively preparing for a sustained, multi-week campaign. The geopolitical tensions have already impacted oil markets, with both Brent crude and West Texas Intermediate (WTI) above $105 per barrel by late Friday, May 15.
The crypto market selloff resulted in a massive liquidation event that wiped out nearly $700 million in leveraged positions within a 24-hour window. According to market data, long bets accounted for approximately 95% of the total, or $666 million, highlighting the leverage-driven nature of the current market structure. The liquidation event affected both Bitcoin and altcoins, with HYPE being the only high-cap coin with double-digit losses, dropping 10.5%, while ZEC and LINK plunged 6.4% and XRP, which surged following the advancement of the CLARITY Act bill on May 14, dropped 4% to $1.41. A majority of altcoins logged 24-hour losses exceeding 3%, which saw their aggregate market cap decline from just over $1.1 trillion to nearly $1.05 trillion at the time of writing. Latest data shows total liquidations of $437.48M on May 15, with long liquidations dominating at $382.92M (87.5%) and short liquidations at $54.56M (12.5%).
CME FedWatch data showed more than 60% probability of a Fed rate hike by March 2027, marking a dramatic reversal from expectations of multiple rate cuts at the start of 2026. According to Brave New Coin, the 30-year Treasury yield crossed 5% while the 2-year yield broke above 4%. April CPI came in at 3.8% while PPI matched 2022 levels at 6%, according to official data. The repricing has been dramatic, with traders now assigning a 60%+ probability that the Fed's next move is a 25 basis-point hike rather than a cut, representing a sharp reversal from weeks ago when the consensus had been for two cuts by mid-2026. Latest data shows the 30-year Treasury yield surged to 5.114% — a 12-month high while CME futures now price a 44% chance of a Fed rate hike by December, marking a structural shift from the rate-cut narrative that powered April's $1.97 billion in ETF inflows.
Technical analysts suggest Bitcoin's pullback is macro-driven, with key resistance at $82,000-$82,500 remaining the key ceiling for momentum traders. As noted by Delta Exchange Research Analyst Riya Sehgal, Bitcoin has again failed to build acceptance above this resistance band. However, institutional activity continued to support confidence, with Bitcoin ETFs seeing strong inflows and regulatory optimism improving after the U.S. Senate Banking Committee advanced the Clarity Act. The divergent performance between cryptocurrency and traditional assets highlights the sensitivity of digital assets to macroeconomic conditions and monetary policy expectations. The next macro test comes with next week's FOMC commentary, where any acknowledgement from Powell that hikes are back in play would likely accelerate the move toward the mid-$70,000s, while a re-anchoring of cut expectations could see BTC reclaim $82,000 quickly. Latest sentiment indicators show the Fear & Greed Index at 42 (Neutral), recovering from sub-30 midweek lows but still well below last week's 69 (Greed) reading.
