The latest breakdown in US-Iran peace talks just sent shockwaves through global markets. President Donald Trump slammed Iran’s response to Washington’s peace proposal as “totally unacceptable,” instantly reigniting geopolitical fear across risk assets. Oil prices jumped nearly 2.5%, while Bitcoin, Ethereum, and XRP faced fresh selling pressure as traders rushed to de-risk and then it did get back to rise for the last 4 hours.
At the same time, the U.S. Dollar Index (DXY) climbed above 98 and then it regressed to 97.9, signaling stronger demand for safe-haven liquidity. Historically, a stronger dollar often creates short-term pressure for Bitcoin and altcoins.
Why Bitcoin dropped below key support
BTC slid nearly 2.2%, falling toward a daily low near $80,274. Trading volume exploded by 95%, showing panic-driven volatility rather than normal market rotation. For the last 4 hours it has recovered and it trades around $81,153.
Iran reportedly responded with a 10-point counterproposal demanding reduced U.S. military presence in the Gulf while asserting stronger control over the Strait of Hormuz — one of the world’s most important oil routes. Trump responded by threatening continued economic pressure and tighter restrictions on Iranian oil exports.
That combination pushed oil sharply higher, increasing fears of rising inflation just days before critical U.S. CPI and PPI data releases. For crypto traders, higher inflation creates uncertainty around Federal Reserve policy and liquidity conditions.
Trump-Xi summit becomes the next catalyst
Now all eyes shift toward the upcoming Trump-Xi Jinping summit scheduled for May 13–15. The meeting could shape global sentiment across trade, AI, rare earth supply chains, Taiwan, and even Middle East stability.
Analysts believe constructive talks between the U.S. and China could stabilize markets and help Bitcoin recover. Meanwhile, crypto regulation also remains in focus as traders monitor the upcoming CLARITY Act vote and speculation around Kevin Warsh potentially becoming the next Fed Chair.
On-chain data still leans bullish
Despite the volatility, analysts say the market isn’t fully bearish yet. CryptoQuant data shows Bitcoin has exited the “panic zone,” while capital inflows are slowly returning. However, inflow strength remains significantly weaker than previous bull cycles.
My Thoughts
This is a macro-driven market. Geopolitics, inflation, and liquidity now control short-term crypto direction more than narratives alone. If the Trump-Xi meeting cools tensions, BTC could rebound quickly. If not, expect higher volatility and defensive positioning across crypto.