- Bitcoin reclaimed momentum after a sharp drop below $100k.
- With conflict risk barely priced in, is this bounce genuine strength?
A month ago, Bitcoin [BTC] hit $111k for the first time, Open Interest (OI) was flying at $80.31 billion, and the market was all-in on a bullish Q2 close. Everything pointed to new highs.
But what happens when the market moves against mainstream expectations? With just a week to go before Q3, BTC has retraced hard, dropping to $98,385 – the lowest daily close in 45 days.
Still, bulls stepped in fast, as BTC’s price climbed back to $101,849, at press time. Like the market isn’t pricing in any real conflict risk just yet.
Is this a true show of Bitcoin’s bid-side strength, or just blind optimism setting the stage for a deeper flush?
Markets shrug off war signals
When BTC hit its all-time high, the market didn’t follow with full-blown euphoria. Technicals stayed cool, with no major overheating signals.
Though the derivatives side was buzzing with high-risk, aggressive bets.
Fast-forward thirty days, and BTC is down nearly 10% from that peak. OI has dropped to $67.71 billion, back to early May levels. So, calling this a classic leverage flush to wipe out weak hands wouldn’t be a stretch.
And the market seems to agree. Bitcoin’s spot exchange reserves keep grinding lower, now breaking multi-year lows. At the same time, BTC dominance has surged to 65.76% – the highest in four years.
Source: Glassnode
In short, the market is leaning defensive, but not exactly panicked.
In the last 72 hours, the U.S. bombed Iranian nuclear sites, Russia has floated nuclear support for Iran, and Iran’s parliament voted to close the Strait of Hormuz. That’s not your average news cycle.
Yet risk assets are barely reacting. S&P futures opened down just -0.5%, and Brent crude is up a modest +2.3%. For context, if markets were even beginning to price in a prolonged Strait closure, oil would be surging past $120.
Structurally, the market is clearly leaning toward a short-duration conflict with limited macro fallout. But in doing so, is this calm laying the groundwork for a volatility shock in Bitcoin?
Bitcoin resilience amid mispriced macro risk
Despite tagging a 45-day low, total realized profits for the day came in soft, at just $753 million. It was well below the $1 billion threshold that typically signals widespread distribution.
This suggests holders are staying disciplined, and exit liquidity hasn’t been aggressively tapped. The HOLDing trend remains structurally intact, with FOMO still outweighing fear.
Compare that to past risk events, like the “Liberation Day” selloff where BTC plunged 16% in a week and realized profits spiked sharply as panic selling accelerated.
Source: Glassnode
Meanwhile, the Estimated Leverage Ratio (ELR) just dropped to -0.25 in under 72 hours, hitting levels not seen since the 2021 “China Ban” when ELR bottomed at -0.35.
That lines up cleanly with Bitcoin’s 12% drawdown and a $13 billion wipeout in OI, confirming a clear deleveraging event.
But here’s the thing: The market still isn’t taking the geopolitical risk seriously. If leverage starts piling back in too soon, that next macro shock could hit a lot harder than people expect.
In that setup, reloading leverage here is structurally risky. One macro jolt, and Bitcoin could unwind deeper, with $98k just the first stop.
