Bitcoin drops to $62,000 then recovers as Iran fears ease

Bitcoin and Ethereum swung from a sharp selloff to a full recovery within hours Wednesday as traders reassessed the risk of a broader Middle East conflict.

Bitcoin fell as low as $62,000 before reversing to trade near $64,500 as of 14:00 UTC, recovering all losses triggered by the collapse of the US-Iran ceasefire.

"The market initially priced in a worst-case scenario of sustained conflict and oil supply disruption, but the reversal suggests traders saw the panic as overdone," said Nina Volkov, crypto macro analyst at Edgen.

The selloff began after President Donald Trump declared the June 2026 ceasefire "over" at a NATO summit in Ankara, following Iranian missile and drone attacks on US military installations in Bahrain and Kuwait. Bitcoin dropped 3.2% to $62,000 within two hours of the news, according to CoinGecko data. Ethereum fell 4.1% to $3,210 before recovering to $3,350. Both assets had erased their losses by the European afternoon session.

The rapid recovery suggests the crypto market views the latest escalation as contained, but the risk of further volatility remains high. If sustained conflict disrupts oil flows through the Strait of Hormuz, energy price spikes could feed into inflation expectations and delay central bank rate cuts — a scenario that would pressure risk assets including crypto.

The S&P 500 initially fell as much as 1.1% before trimming losses to 0.3% after Trump said the recent fighting did not mean a return to full-scale war, according to the Washington Post. Oil prices rose on the news, reflecting market concern over potential supply disruptions from the Strait of Hormuz, through which about 20 percent of global oil passes.

Solana fell below $77 during the selloff, trading between $76.96 and $78.47 as analysts reassessed the impact of geopolitical developments on risk assets. The token's decline below the $77 support level was seen as a potential indicator for further declines if tensions escalate again.

The pattern mirrors prior Iran-related tensions. Every major flare-up since the 2020 Soleimani strike has produced short-term volatility spikes in Bitcoin, with the direction depending on whether the shock triggers forced liquidations or allows the safe-haven narrative to build. The July 9 reversal suggests the latter dynamic prevailed this time.

Bitcoin's 24-hour trading volume rose to about $28 billion, above its seven-day average, as the volatility drew in both sellers and dip buyers. Open interest across Bitcoin futures fell 2.5 percent during the selloff before stabilizing, Coinglass data shows.

This article is for informational purposes only and does not constitute investment advice.