The cryptocurrency market experienced a broad decline on Sunday following the failure of US and Iranian negotiators to reach a peace agreement. Prices for Bitcoin, Ethereum, and other major digital assets fell across the board.
As of 9:28 PM Eastern Time on Sunday, Bitcoin had fallen 2.6% over 24 hours to $71,093, after earlier hitting an intraday low around $70,600. Concurrently, Ethereum dropped 3.6% to $2,202, Ripple's XRP declined 2% to $1.33, and Solana decreased 3.25% to $82. The GMCI30 Index, which tracks the performance of the top 30 cryptocurrencies globally, fell 2.5% in the same period.
A crypto analyst noted that geopolitical developments were the primary driver for the market, with the breakdown of US-Iran talks in Islamabad after 21 hours triggering significant risk-off selling pressure. Despite the lengthy negotiations, officials from both nations were unable to resolve the prolonged conflict. The US Vice President stated that Iranian representatives refused to accept American terms, while Iranian official media reported the talks failed due to what they called "unreasonable demands" from the US.
Although a two-week ceasefire announced previously by the US President had spurred a rebound in cryptocurrencies and other risk assets last week, investors remain cautious. A comprehensive peace agreement is seen as likely requiring difficult concessions and a softening of stance from one side.
Cryptocurrency prices faced additional pressure after the US President announced an order to blockade the Strait of Hormuz to increase pressure on Iran. Iran has been blocking this critical oil chokepoint and charging passage fees of up to $2 million per vessel. This move has the potential to escalate conflict further in the Middle East.
Despite the short-term volatility, analysts emphasize that institutional fundamentals remain resilient. The analyst highlighted that Bitcoin spot ETFs recorded their strongest weekly inflows since February last week, totaling $786 million. BlackRock's IBIT led the inflows, while Morgan Stanley's newly launched MSBT attracted a substantial $46 million, benefiting from the industry's lowest fee structure.
Analysts indicated that Bitcoin is currently testing a support range between $70,500 and $71,000, with the next resistance level situated between $72,000 and $73,000. They added that a key signal for the market would be a sustained inflow into ETFs coupled with Bitcoin reclaiming that specific price range.
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