Key Takeaways
- Bitcoin fell below $80,000 on May 7, erasing weekly gains after hitting a high of $82,833.
- Volatility triggered $270 million in liquidations and pulled the crypto market cap to $2.74 trillion.
- Concerns mount that President Trump may pivot to a hot war as Tehran rejects the latest U.S. proposal.
The Iran Peace Deal Factor
On May 7, bitcoin reversed course, dipping below $80,000 to effectively erase gains made since Monday. As shown by the daily chart, the top cryptocurrencyโwhich reached a multi-month high of $82,833 some 24 hours earlierโhad been under pressure from bears since Wednesday afternoon.
After losing $1,000 during a slow descent from midday to midnight, bitcoin found temporary support at $80,700. While a pre-dawn rally lifted the price to $81,600, the momentum proved unsustainable. The subsequent sell-off was more aggressive, forcing the asset down to a $79,500 intraday low. As of 1 p.m. EDT, bitcoin has reclaimed some ground, currently hovering just below the $80,000 mark.
Bitcoinโs nearly 2% drop dragged its market capitalization below the $1.6 trillion mark, a marked decline from the approximately $1.66 trillion intraday peak reached on Wednesday. The drop helped pull the crypto economyโs market cap to $2.74 trillion, down from just over $2.8 trillion.
The cryptocurrency marketโs retreat, which mirrored Wall Streetโs, coincided with reports that Iran had rejected the Trump administrationโs proposal to end the war. According to a post on X by Walter Bloomberg, a senior Iranian official, Mohsen Rezaei, said Tehran rejected the proposalโwhich calls on Iran to reopen the Strait of Hormuzโbecause it does not include reparations for war damage.
Iranโs rejection of the U.S. proposal neutralized the optimism sparked by earlier Axios reports that a deal was imminent. Concerns are mounting that a prolonged diplomatic stalemate will embolden Washington hawks, potentially sidelining proponents of diplomacy and nudging President Trump toward a direct military confrontation.
Despite the plunge, bitcoin was at the time of writing still up nearly 5% since the beginning of the month and more than 15% over a 30-day period. Meanwhile, bitcoinโs volatility over the 24-hour period saw $91 million in overleveraged long positions wiped out, compared with $12 million in shorts. Overall, the crypto economy saw nearly $270 million in long bets liquidated versus $90 million in shorts.
