Cryptocurrency "Avalanche" Amid Geopolitical Conflict, Bitcoin Plummets, 200,000 People Liquidated and Wiped Out!

Why Does Bitcoin Reveal Its Risk Asset Nature During Geopolitical Conflicts?

Recently, threats and conflicts between the United States, Israel, and Iran have escalated continuously. This tense situation is like a boulder thrown into a calm lake, stirring waves across the cryptocurrency market, which has once again fallen into a downturn.

As of press time, the major cryptocurrencies in the market have collectively suffered heavy losses. Bitcoin has fallen more than 3%, with its price dropping to around $68,100; Ethereum’s performance has been even worse, declining over 4%. According to CoinGlass data, in the past 24 hours, over 200,000 traders worldwide have been liquidated, with total liquidation amounts reaching $555 million, leaving countless investors with significant losses.

Since the U.S.-Israel attack on Iran at the end of February, Bitcoin’s price has been like a roller coaster. It once broke through the $75,000 mark, giving investors a glimmer of hope, but by March 23, it had retraced nearly 10%. Against the backdrop of geopolitical conflict, Bitcoin not only failed to become a safe haven as some investors expected but also experienced a sudden crash. This abnormal phenomenon has attracted widespread attention and deep reflection in the market.

Several experts have provided professional analysis of this phenomenon. Li Ming, researcher at Hong Kong Polytechnic University and executive president of the Hong Kong Web3.0 Standardization Association, pointed out that in emergency situations, some investors are forced to sell Bitcoin to exchange for fiat currency to buy plane tickets or daily necessities. Meanwhile, rising oil prices have prompted some groups to sell assets to obtain liquidity. More critically, the high leverage in the derivatives market has become the “trigger” for this flash crash. Once someone starts selling, the falling prices can trigger a cascade of leveraged positions being liquidated, forming a “death spiral” that further intensifies selling pressure.

Professor Zhao Binghao, director of the Fintech Legal Research Institute at China University of Political Science and Law, commented: “These movements are hard to explain as traditional ‘safe assets’; they are more like typical ‘risk assets being de-leveraged.’” He further explained that the passive liquidation of high-leverage positions, liquidity stratification leading to market crashes, and capital retreating into cash or short-term bonds have collectively caused the current situation in the cryptocurrency market. Wang Lixin, founder of Carbon Chain Value, made a more direct judgment: “It reveals its true nature as a high-beta global liquidity asset.”

This flash crash in the cryptocurrency market once again serves as a warning to investors. Under the complex and volatile geopolitical landscape and high-leverage market environment, the risks of cryptocurrency investment are greatly increased. Investors should exercise caution, avoid blindly following trends, and prevent significant losses.