Bitcoin’s sharp pullback on Monday triggered a flurry of liquidations across crypto markets, wiping out over $470 million in leveraged positions.

The leading cryptocurrency fell roughly 4.6% from $67,600 to $64,435 in less than two hours during early Asian trading, according to CoinGecko data. The sudden collapse has resulted in over $505 million in liquidated positions across all assets over the past 24 hours, per CoinGlass data, with

accounting for $232 million and Ethereum for $126 million.

Bitcoin is currently trading at around $66,280, down 2.7% on the day.

“The downturn was not triggered by a sudden ‘black swan’ event or unexpected negative news,” Tim Sun, senior researcher at HashKey Group, told Decrypt. “Instead, it was driven by policy uncertainty stemming from fluctuations in U.S. tariff policy, compounded by rising geopolitical risks. Together, these factors forced the market to reprice risk assets.”

The U.S. Supreme Court’s Friday ruling stated that President Donald Trump’s “reciprocal” tariffs are illegal. That hasn’t stopped Trump from imposing a sweeping 10% global tariff in response to the ruling.

The selloff underscores Bitcoin’s continued sensitivity to macro uncertainty, with risk assets repricing amid fluctuations in tariff policy and geopolitical tensions rather than crypto-specific catalysts.

Users on prediction market Myriad, owned by Decrypt’s parent company Dastan, have assigned a 37% chance that Bitcoin’s next move will propel it to $84,000. That probability has dropped almost 10% from Sunday’s peak of 46.4%, reflecting  growing pessimism among investors.

Macro catalysts

Sun pointed to a confluence of pressures: sticky December PCE inflation data, Middle East tensions pushing crude oil to periodic highs, and interest rate markets now pricing out any chance of a March rate cut.

The markets have repriced rate-cut expectations from 90% last week to 96% as of Monday, according to the FedWatch tool, suggesting that the Federal target rate is likely to remain unchanged at 3.50% to 3.75% at the next FOMC meeting. On Myriad, predictors place just a 21% chance on a rate cut of more than 25bps before July, down from 40% earlier in the month.

The broad contraction in risk appetite is a result of these developments, the HashKey analyst said. It is evident in the crypto market’s drop and gold’s 1.23% uptick today, at 5,166 per ounce.

“In an environment defined by policy uncertainty, sticky inflation, and geopolitical risk, risk appetite has contracted significantly,” Sun explained. “Assets with high volatility and high liquidity dependence were the first to face pressure, driving the broad correction in risk assets.”

Another factor that is playing a critical role in Bitcoin’s drop is crypto assets being treated as ‘risk assets’ by institutional capital. “Instead, they remain firmly anchored at the far end of the risk curve,” Sun said.

Looking ahead, he expects limited inflows and a protracted bottoming process due to increased uncertainty that has “dampened the willingness of ‘sidelined’ capital to enter the market.”

He cautioned that bounces are likely to be “technical recoveries” without sustained liquidity support, and any periodic bounces are more likely to be technical recoveries rather than trend reversals.”

The key to a crypto market rebound lies in a convergence of macro signals turning positive, Sun said. He pointed to inflation trends, energy prices, geopolitical developments, and stability in traditional risk assets as critical watchpoints.

“If traditional risk assets remain under pressure, crypto is unlikely to rally independently,” Sun added. “A stabilization in stocks is a prerequisite for a crypto recovery.”