Bitcoin prices plummeted 7% on Wednesday, shattering critical support levels to reach a nine-week low of $65,385 on Coinbase. This sharp correction follows a Tuesday session where the asset shed more than $4,500, marking the largest single-day decline since February 5. The sell-off coincides with renewed military strikes between the US and Iran after ceasefire negotiations stalled, creating immediate volatility across digital asset markets. Data compiled by Woofun AI shows that approximately 277,000 traders faced liquidation over the preceding 24 hours, with total losses reaching $1.83 billion.

Notably, over 90% of these liquidated positions were long bets concentrated in Bitcoin and Ether (ETH), indicating a severe unwinding of leverage driven by macro fear.

Andri Fauzan Adziima, research lead at Bitrue Research Institute, argues that the current price action stems primarily from leveraged liquidations, heavy ETF outflows, and technical breakdowns rather than the geopolitical news alone, though the conflict amplifies market anxiety. Woofun AI notes that Adziima anticipates a period of choppy consolidation, identifying genuine support zones between $64,000 and $65,000. He suggests that any de-escalation in tensions or a strong macroeconomic rebound could trigger a sharp relief rally, provided the market stabilizes above these critical thresholds. The broader crypto market, valued at $150 billion, witnessed a significant capital exodus as investors reacted to the escalating regional instability.

The US Central Command confirmed on Tuesday that it successfully intercepted multiple Iranian ballistic missiles and drones while conducting self-defense strikes on Qeshm Island. CENTCOM reported that Iran launched several missiles toward regional neighbors, including two at Kuwait and three at Bahrain, all of which failed to hit their intended targets. These actions represent a direct response to what the US termed aggressive Iranian behavior, effectively ending a two-month period of relative calm. The military engagement occurred while indirect talks regarding a ceasefire extension and the lifting of the Strait of Hormuz blockade remained deadlocked without a formal agreement.

Political rhetoric surrounding the conflict has intensified, with President Donald Trump taking to Truth Social to refute reports that diplomatic channels had closed. He asserted that conversations between the US and the Islamic Republic of Iran have continued continuously over the past four days, including interactions on Tuesday. This statement directly contradicted a report from Iran's Tasnim news agency, which claimed the country would halt all dialogue until Israel ceased its attacks on Lebanon. The divergence in public statements highlights the fragility of the diplomatic situation and the potential for rapid escalation.

The intersection of geopolitical risk and technical market structure has created a precarious environment for Bitcoin and other major assets. While the immediate catalyst involves military strikes, the underlying market mechanics reveal a system highly sensitive to leverage and sentiment shifts. Woofun AI analysis suggests that the path forward depends heavily on whether the $64,000 to $65,000 range holds as a floor or if further downside pressure forces a deeper retest of historical support levels. Investors are now watching for signs of de-escalation that could reverse the current bearish momentum.