Analysts Warn of Deeper Crypto Drop Amid Geopolitical Fears

Crypto analyst BitQuant has identified a stark hesitation among market participants to purchase Bitcoin at its current level near $65,000, attributing the reluctance directly to geopolitical fears. According to BitQuant, reports of a potential U.S. attack on Iran have created a dominant narrative that is paralyzing investor action. The prevailing belief, as noted in his analysis, is that such an event could drive Bitcoin’s price down to $50,000, with Ethereum expected to follow suit in a decline. This fear-based calculus is causing investors to wait on the sidelines for a deeper dip, despite the assets already trading significantly below recent highs.

Compounding the geopolitical risk is domestic policy uncertainty emanating from the United States. The announcement by former President Trump over the weekend to hike global tariff rates, following a Supreme Court ruling, has introduced another layer of macroeconomic anxiety into the crypto market. BitQuant argues that this focus on headlines is causing investors to overlook a critical nuance: Bitcoin previously fell from $90,000 to $60,000 without any specific news catalyst. He suggests that whether or not the U.S. attacks Iran, Bitcoin and Ethereum could still see lower prices due to this pervasive, reactive market psychology.

Beyond sentiment, on-chain analytics from CryptoQuant provide a data-driven case for further downside. A key analysis suggests Bitcoin could still drop below $40,000, targeting a zone around $38,900. This figure is not arbitrary; it represents the aggregate cost basis for long-term holders (LTHs), a cohort known for their resilience. Historical precedent cited by CryptoQuant indicates that each major bear market has been characterized by Bitcoin’s price breaking below this critical support level.

This breach typically triggers what analysts term a ‘final capitulation phase,’ marked by realized losses of approximately 20%. It is only after this painful sell-off by the most steadfast investors that the market has historically been able to rebuild the necessary foundations for a sustained trend reversal, ultimately leading Bitcoin and Ethereum to new highs. The current market structure, therefore, may require navigating this potential capitulation before a durable bull market can resume.

Further evidence of persistent weakness comes from institutional buying patterns. CryptoQuant’s monitoring of the Coinbase Premium Index, a gauge of U.S. institutional demand, shows limited signs of recovery. While the index’s 30-minute simple moving average briefly crossed above zero, it failed to maintain any positive momentum into the new week. This lack of sustained recovery in the premium, despite a temporary uptick, is considered a potential trigger for the recent downward price action, indicating that large buyers are not yet stepping in to support the market aggressively.

Amidst these short-term pressures, BitQuant offers a longer-term perspective that critiques the market’s fundamental mindset. He states that many participants still fail to understand Bitcoin as a system, viewing it merely as a speculative asset. This perspective, he analogizes, reduces investing to a football match where participants ‘celebrate when there is a goal and leave the stadium when there isn’t.’ Despite the near-term risks of deeper declines, BitQuant emphasizes that current prices are inconsequential in the long-term trajectory, asserting that Bitcoin, and possibly Ethereum, are still likely to trade significantly higher once the market moves beyond its headline-driven paralysis.