Analysts warn that Bitcoin’s recent sharp decline, triggered by geopolitical tensions, could foreshadow a much deeper drop due to structural market vulnerabilities. U.S. President Donald Trump’s speech on the Iran conflict reversed market expectations, causing Bitcoin to fall from $69,000 to under $67,000. Researchers from XWIN Research Japan released a report outlining a worst-case scenario where BTC could fall by 80%, to around $10,000, in the event of a full regional war or a blockage of the Strait of Hormuz.
A speech by U.S. President Donald Trump signaling an escalation in the Iran conflict sent Bitcoin tumbling from $69,000 to below $67,000. The sell-off repriced market odds for a prolonged war and erased the previous session’s gains.
Analysts at XWIN Research Japan stated the reaction revealed serious structural problems within Bitcoin’s derivatives market. They warned these issues could cause prices to drop by as much as 80% in a worst-case scenario.
Markets had anticipated a de-escalation, but Trump indicated the situation would worsen over the next two to three weeks. This triggered a broad risk-off movement across traditional markets and a spike in oil prices to $111 a barrel.
XWIN noted that rising oil prices boost inflation expectations while a stronger dollar tightens global liquidity. Both conditions typically drive capital away from risk assets like cryptocurrency.
The report highlighted a specific vulnerability with CME Bitcoin futures open interest reaching 18,000 to 20,000 BTC. This concentration in short-dated contracts means price discovery is driven more by leveraged positioning than spot demand.
Under market stress, these leveraged positions may liquidate instead of rolling over. This can create cascading sell pressure that amplifies price moves beyond what underlying spot flows would justify.
The researchers outlined three potential scenarios for Bitcoin’s price. The mildest case projects a slide to around $50,000 if current conditions persist without significant deterioration.
A more severe scenario could see Bitcoin fall to between $20,000 and $30,000 if ETFs see sustained outflows. The ultimate bear case involves a full regional war or Strait of Hormuz blockage, potentially driving BTC to $10,000.
