Bitcoin slips to $71K as war fears spark risk-off mood

Bitcoin retreated on 5 March after a powerful rally lost momentum, falling from a brief peak near $74,000 and stabilising close to the $71,000 level during the trading session.

The pullback ended a strong three-day run in which the cryptocurrency had climbed almost 10 percent and briefly reclaimed the psychologically important $74,000 threshold.

Market data showed the asset slipping to an intraday low of $70,902 before buyers stepped in, allowing the price to consolidate slightly above $71,000.

The move represented roughly a 3 percent decline over the past 24 hours as traders locked in profits after the rapid advance earlier in the week.

Despite the short-term decline, bitcoin continues to hold a weekly gain of more than 6 percent, outperforming many traditional assets during a period of geopolitical uncertainty.

The rally had initially been fuelled by growing concerns surrounding escalating tensions in the Middle East, which pushed some investors toward alternative assets such as cryptocurrencies.

Global financial markets, however, displayed mixed reactions as bitcoin cooled while several major Asian and European indices staged strong rebounds.

South Korea’s Kospi index led the recovery with a remarkable surge of about 9.6 percent, rebounding sharply after suffering its worst single-day drop on record just a day earlier.

Analysts said the rapid turnaround followed the South Korean government’s announcement of a massive $68 billion market stabilisation fund aimed at restoring investor confidence.

Japan’s Nikkei 225 also posted gains during the session, closing roughly 1.9 percent higher as regional markets attempted to recover from earlier volatility.

European markets echoed the cautious optimism seen in Asia, although the recovery was less dramatic compared with the sharp rebound in South Korea.

In contrast, United States equity markets struggled to follow the global rebound, with technology shares leading the decline during midday trading.

By around 12:45 p.m. Eastern Time, the Nasdaq index had dropped approximately 248 points, representing a fall of about 1.09 percent.

The S&P 500 index was also under pressure, declining roughly 1.25 percent during the same trading window.

The Dow Jones Industrial Average recorded the steepest loss among major U.S. indices, falling close to 2 percent as investors remained cautious.

The divergence between U.S. and Asian equities has emerged as geopolitical tensions continue to dominate investor sentiment worldwide.

Military exchanges between Iran and a joint United States-Israeli coalition have intensified, with continued strikes targeting infrastructure and strategic facilities across the region.

Iran has responded with retaliatory attacks across several Gulf states, raising fears that the conflict could further destabilise energy markets and global trade routes.

On prediction platform Polymarket, traders now place only an 11 percent probability on a ceasefire being reached by 15 March.

Market watchers warn that a prolonged conflict in the Gulf region could prolong inflation pressures by disrupting energy supply chains and regional economic stability.

The decline in bitcoin’s price during the session erased an estimated $40 billion from the cryptocurrency’s overall market capitalisation.

Bitcoin’s total market value now stands near $1.42 trillion following the latest round of selling pressure.

The correction also rippled through cryptocurrency derivatives markets, where liquidations accelerated as leveraged positions were forced to close.

Data shows that roughly $120 million worth of crypto positions were liquidated during the downturn.

Long traders accounted for the majority of the liquidations, representing around $73 million as bullish bets were unwound.

The shift signalled that the recent momentum-driven rally may have moved too quickly for some leveraged investors.

Even so, the broader narrative surrounding bitcoin as a potential safe-haven asset during geopolitical instability remains a topic of debate among analysts.

Some investors argue that bitcoin’s recent performance demonstrates resilience compared with traditional markets under similar conditions.

Others believe the asset still behaves like a high-risk technology investment rather than a true defensive store of value.

"The current move may still be a bounce rather than the start of a sustained uptrend,"

Arthur Hayes said.

Hayes added that traders should remain patient because the market has not yet fully exited what he describes as the high-risk phase of the current global liquidity cycle.

At the time of reporting, Bitcoin price was $71,025.38.