- Bitcoin’s RSI at 28 indicates oversold conditions providing good entry levels for long-term investors, while global geopolitical risk is increasing.
- $1.2B in liquidations, and the Crypto Fear & Greed index indicates a calm and stable sentiment below the panic selling with a score of 54.
- Poor dollar, soft inflation decreased to 2.4%, and increasing odds of a rate cut make a great macro case for crypto strength in the next few months.
Following the escalation of tensions between Israel and Iran, a Bitcoin price drop caused a cascade of liquidations in the crypto market. In this instance, the price drop reflected risk-on sentiment in the wider financial markets, but the crypto always reacts sharply to escalations.
Market Reacts to Escalation With Sharp Sell-Off
According to on-chain analyst Leshka.eth, Bitcoin’s price has dropped abruptly by 5% to $103,000, while Ethereum dropped 10% to $2,400. The price declines caused $1.2 billion in digital asset liquidations. The abrupt correction is due to geopolitical uncertainty, not a weakening of fundamentals.
In spite of the temporary decline, Leshka.eth pointed out that these types of movements are included in risk-off scenarios when global tensions arise. Historically, these events prompt temporary volatility, with investors shifting to safer assets. However, the crypto market has shown resilience once uncertainty fades.
Macro Trends Support Long-Term Crypto Strength
The fundamental factors within the macro economic environment also remain bullish towards crypto. According to Leshka.eth, the U.S. Dollar Index remains weak even with safe-haven demand. U.S. inflation data came in softer than expected, at 2.4% compared to 2.5%.
Market sentiment now leans toward a 57% probability of a Federal Reserve rate cut. Historically, a weakening dollar supports crypto strength. Data shows that Bitcoin returns an average of 43% during three-month periods following a 5%+ DXY drop.
Even as oil briefly spiked to $75, traders appear to have priced in the move. The Crypto Fear & Greed Index stayed at 54, reflecting stable sentiment despite the selloff.
Bitcoin Shows Oversold Conditions Amid Stable Fundamentals
From a technical standpoint, Bitcoin is now officially in oversold territory, with a Relative Strength Index (RSI) of 28. This could present buying opportunities for longer-term holders.
Leshka.eth mentioned that while short-term volatility will continue, the big picture is clear: a weaker dollar and dovish Fed policy will fuel increased institutional interest in crypto.
Retail investors tend to react to headlines, but long-term participants often view these dips as entry points. With altseason still expected, many are focusing on strategic accumulation rather than short-term panic.
