Bitcoin drops below $65K on Wednesday. The asset extended losses amid escalating geopolitical tensions in the Middle East and investor uncertainty ahead of the Fed rate decision.
Almost $216 million in longs were liquidated from top crypto assets in the last 24hours. Consequently, the Crypto Market Fear & Greed Index dipped to 22 after a recent rebound from 9 (extreme fear).
Why Bitcoin drops below $65K today
Middle East tensions spiked as Iran’s military issued fresh warnings against Israel. Specifically, they threatened a “harsh response” if Israeli attacks in southern Lebanon do not cease. Therefore, oil prices surged, triggering a drop in Bitcoin below the psychological $65K level.
Iran’s Khatam al-Anbiya central command accused Israel of violating a recent ceasefire agreement. This followed strikes that killed four people in Lebanon. Notably, these threats come despite an earlier US-Iran peace agreement to open the Strait of Hormuz.
Iranian officials have reiterated warnings of strong retaliation, including potential strikes on Israeli targets. Meanwhile, they criticized ongoing Israeli operations. The latest warning added weight as the agreement enables Iran to tap into a total of $100 billion in frozen funds and the $300 billion reconstruction fund.
Consequently, market participants are closely monitoring the situation. Any further escalation could increase volatility and renew inflationary pressure risks.
Bitcoin falls ahead of Fed rate decision and retail sales data
Bitcoin fell today as traders braced for the release of May U.S. retail sales data and the FOMC meeting outcome. While the Fed is expected to hold rates steady in the 3.50%-3.75% range, market conditions could worsen if new Fed Chair Kevin Warsh adopts a hawkish tone.
The expected 0.5% month-over-month rise in U.S. retail sales would cause the Federal Reserve to maintain or even hike interest rates. This is due to resilient consumer spending despite higher energy prices amid Middle East tensions.
At press time, Bitcoin trades near $64,914, down more than 2.14%.
In addition, CoinGlass data showed massive selling in the derivatives market across Bitcoin, Ethereum, XRP, and other leading altcoins. Specifically, total BTC futures open interest dropped 3.30% to $48.13 billion in the last 24 hours. The 4‑hour BTC futures OI fell 1.18% on CME and 1.54% on Binance.
Analyst warns of further downside
Analyst Ted Pillows noted that Bitcoin appears to be repeating the exact February 2026 pattern. He predicts that de‑risking amid the Fed rate decision could cause a crash to $62K levels if the pattern repeats. Notably, the Bank of Japan hiked interest rates to a 31‑year high of 1%. Therefore, this risks unwinding of carry trades if the yen strengthens.
Even though temporary seller exhaustion is clear, popular analyst Rekt Capital said: “The buy‑side volume to take advantage of that hasn’t been strong at all.” Consequently, BTC continues to struggle with February lows, with $65.7K as key resistance to break for a rebound.
