Bitcoin drops below $70,000, with technical resistance weighing on the market—Middle East tensions exerting pressure

Last week’s Bitcoin market experienced intense price movements, with a sharp rise followed by a rapid correction. Bitcoin surged temporarily to $74,000 on Thursday but was subsequently forced down to around $70,000, currently trading near $70.71. About one-third of the gains were lost, increasing caution among market participants. Mainstream assets like Ethereum at $2.15K and Dogecoin also faced downward pressure during this period, indicating a broad correction across major cryptocurrencies.

Key Reasons Why Market Rebound Has Stalled

Last week’s rally was mainly a recovery of losses caused by the war. In just five days starting Saturday, prices rose about 15%, but the rebound lost momentum after reaching the technical resistance at $74,000.

Alex Kuptzevich, Chief Analyst at FxPro, points out that this halt is highly significant technically. The market faced two resistance zones simultaneously—the 61.8% Fibonacci retracement and the 50-day moving average—leading to a rapid decrease in buying pressure.

Fibonacci retracement is a technical indicator used to predict the extent of a rebound after a significant decline. The 61.8% level often marks the end of a bear rally and is a psychological resistance line closely watched by investors. The 50-day moving average reflects the average price over the past 50 days and serves as a benchmark for profit-taking during downtrends. The convergence of these two at around $74,000 created a highly congested technical level.

Kuptzevich comments, “The bulls still need to convince the market that the bear market is over,” suggesting that much of the recent rise was driven more by technical factors than mere bullish sentiment.

Short Squeeze Triggered the Rapid Rally

According to Bitunix analysts, the main driver of the surge was likely a short squeeze rather than new buying. Many traders had their stop-loss orders placed too close to the market price, leading to a chain reaction of liquidations during the upward move.

In fact, at the $74,000 level, concentrated short positions were liquidated, and during the correction, long leverage liquidations clustered around $70,000. This microstructure analysis strongly indicates that the rally was driven by speculative position adjustments.

Additionally, analysis shows a major liquidity pool near $64,000. If the $70,000 support fails, the market could sharply decline toward $64,000. These levels are confirmed on the liquidation heatmap and are critical turning points.

Challenging Macro Environment Continues

The macro environment remains chaotic heading into the weekend. Since the outbreak of conflict in the Middle East, major Asian stock indices have fallen 6.4%, and the MSCI regional index is expected to record its worst weekly performance since March 2020.

Meanwhile, the dollar remains strong, possibly posting its best week since November 2024. Oil prices have seen their largest weekly increase since 2022, trading around $100 per barrel. These factors generally do not support a crypto rally.

Concerns over passage through the Strait of Hormuz persist, with Defense Secretary Hegseth suggesting the conflict could last three to eight weeks. This raises the likelihood of renewed inflation fears and sustained high interest rates, which could weigh on markets for the foreseeable future.

On Friday, Asian stocks temporarily recovered from early losses, buoyed by reports that the U.S. is considering options to weaken the dollar and address rising energy costs. However, with the Senate unable to block Trump’s continued military actions in Iran, this relief may not last long.

Weekly Performance of Mainstream Assets and Outlook

Since the outbreak of the Iran conflict, Bitcoin has outperformed gold, but major cryptocurrencies have shown mixed weekly results.

Latest data shows Bitcoin down 5.58% over seven days, Ethereum down 9.02%, BNB down 6.54%. Solana declined 5.41%, Dogecoin fell 9.31%, and XRP dropped 8.18%. The weekend outlook suggests limited chances for a rebound, indicating broad downward pressure across the market.

In a context where traditional Bitcoin dominance no longer applies, the entire market is clearly under shared downward pressure.

The $70,000 Support Line Under Scrutiny

The $70,000 level, which had been a resistance for a month, has now become the first line of defense. Holding this level would suggest that last week’s rally was not a true breakdown but merely a rebound.

Conversely, if this level is broken, the market will likely target the next support at $64,000. Wintermute trader Brian Tan warns that, given the current lack of sustained upward movement above $75,000, investors should be cautious about buying the dip.

Unless tensions in the Middle East ease, the likelihood of maintaining the $70,000 support remains low. Future market developments depend heavily on whether this level can be defended.