Bitcoin Faces Volatility Amid Geopolitical Tensions and Economic Uncertainty

Bitcoin (BTC), which exhibited bullish momentum as it approached 170 million won the previous day, reversed course and entered a downward trajectory. Analysts attribute the heightened volatility to a combination of cautious investor sentiment ahead of the upcoming U.S.-China summit and the prolonged U.S. government shutdown, which has deepened market uncertainty.

As of 8:40 a.m. KST on the 22nd, Bitcoin was trading at 163.3 million won on South Korea's Upbit exchange, reflecting a 1.56% decline from the previous day. On Binance, the global benchmark cryptocurrency exchange, BTC declined by 1.76% and was priced at $10,867. The CoinDesk20 index, a key indicator tracking the top 20 digital assets including Bitcoin, showed a 1.28% decline. Among major altcoins, Ethereum (ETH) fell 2.94% to $3,865, while XRP posted a 2.81% drop to $2.42.

Elevated Liquidations Signal Market Instability

High levels of liquidations point to intensified market volatility. Data from CoinGlass revealed that crypto positions worth approximately $313.27 million (448.6 billion won) were liquidated in the past 24 hours, with 51% of the liquidated Bitcoin positions being long bets. Across the broader crypto market, total liquidations amounted to nearly $700 million (approximately 1 trillion won).

Earlier in the day, Bitcoin briefly fell below the psychologically significant level of $10,800 but rebounded to around $11,270 as buying pressure emerged. Ethereum also fought back, reclaiming the $4,000 level temporarily before retreating once again after the close of U.S. stock markets.

Bitcoin’s Role as a Potential Safe Haven Strengthens

Amid sharp declines in traditional safe-haven assets like gold and silver, Bitcoin briefly captured attention as an alternative investment option. Gold prices plummeted 5.5% to $4,115 per ounce, recording their steepest single-day loss since August 2020, while silver dropped by 7.6% to $48.49 per ounce.

Quinn Thomson, founder of Lekker Capital, remarked, “Bitcoin is likely to follow any rallies in gold as an alternative store of value.” Charlie Morris, ByteTree's Chief Investment Officer, added, “The adjustment in gold prices might be the catalyst needed for Bitcoin to establish a new upward trend.”

Geopolitical Uncertainty Weighs on Bitcoin

Bitcoin’s inability to sustain upward momentum is attributed to a combination of profit-taking by short-term traders and rising geopolitical tension ahead of the summit between U.S. President Donald Trump and Chinese President Xi Jinping. In remarks during a White House luncheon, Trump expressed optimism about the meeting's outcomes, noting that a broad range of issues will be discussed during their visit to South Korea.

However, President Trump’s stance on imposing an additional 100% tariff on Chinese imports starting next month has injected uncertainty into financial markets. This retaliatory move stems from China’s controls on rare earth exports, a vital resource for many industries.

Prolonged U.S. Government Shutdown Fuels Investor Concern

The extended U.S. government shutdown continues to disrupt key economic data releases, further clouding market sentiment. One major impact has been the Commodity Futures Trading Commission’s (CFTC) inability to publish its critical weekly position reports, leaving hedge funds and institutional investors struggling for insights into gold and silver futures market trends.

To alleviate some concerns, the U.S. Bureau of Labor Statistics rescheduled its September Consumer Price Index (CPI) report to the 24th of this month, after postponing its release from the originally planned date of September 15. This CPI data, seen as a barometer of inflationary pressure, is expected to play a pivotal role in shaping the financial markets’ trajectory in the weeks ahead.

Market Sentiment Edges Higher Amid Lingering Fear

The Alternative Fear & Greed Index, a widely followed measure of sentiment in the digital asset market, saw modest improvement. Rising to 34 (indicating Fear) from the previous day’s 29, the index suggests slightly less selling pressure but remains far from signaling strong bullish momentum. Extreme fear, highlighted by readings nearing zero, often heralds intensified bearish conditions, whereas scores close to 100 reflect heightened buying enthusiasm.

While Bitcoin’s brief appeal as a safe-haven asset amid gold price volatility underscores its potential resilience, broader macroeconomic headwinds and geopolitical risks continue to limit significant upside movement. Investors are keeping a close eye on key developments, including the upcoming U.S.-China summit and crucial CPI data, as they assess market trends and long-term investment opportunities.