On April 11, the U.S. and Iran held talks in Islamabad, which were brokered by trusted Pakistani officials, on the possibility of a peace deal. This follows both parties’ announcement of a two-week ceasefire on April 7. However, after 21 hours of negotiations, neither the U.S. nor Iran could reach an agreement.
The market reacted sharply to the news of the breakdown in peace talks, with Bitcoin dropping from $73,000 to around $70,000 and XRP falling from $1.36 to $1.32. Although the two countries could still reach an agreement, the damage has been done again—crypto liquidations over the last 24 hours have crossed $277 million. As the bearish market pressure intensifies, the most important question right now is how much worse could it get?
How Geopolitical Risk Is Driving the Crypto Sell-Off
In 2026, geopolitics has become crypto’s biggest driver, and the two are now directly connected. The market’s performance has been tied to war news since the first set of bombs hit Iran on February 28. Within 72 hours of the first attack, over $128 billion in liquidations were recorded.
When U.S. President Donald Trump suggested at the start of Q2 that the conflict could be over in three weeks, the market reacted positively. Bitcoin reached $70,000, and XRP regained its $1.35 support. But the positive sentiment didn’t last as fears of further escalations weakened its momentum.
The collapse of the Islamabad talks on April 12 delivered the latest blow to the already fragile sentiment in the crypto market. It was the first sit-down since the 1979 Islamic Revolution, which transformed Iran into a religious state, making the talks a big deal. Vice President JD Vance has said that the breakdown happened because Iran has refused to abandon its nuclear weapons program. Within hours of the news, the U.S. military announced that it would begin blockading Iranian ports, throwing the ceasefire into serious doubt.
Many fear that the recent tensions could lead to another closure of the Strait of Hormuz, through which roughly 20% of the world’s oil supply passes. This hasn’t helped the market since it is already trading in extreme fear territory. The recent market sell-off seems to come from a cycle that has been in place since February. During this time, the war news has shocked the market, triggered oil price surges, and tightened monetary conditions.
The combined effect of these events has drained liquidity from crypto and other financial markets. Unless negotiations resume soon, Q2 could be just as bearish as the last quarter.
How Much Lower Can Crypto Go From Here?
The total crypto market cap has fallen from $2.5 trillion to around $2.4 trillion since the news of the breakdown in talks hit the market. But many traders fear that the worst is yet to come. We have analyzed multiple scenarios on how low the crypto market could fall following recent geopolitical risks.
Oil Shock and Institutional De-Risking
If the Strait of Hormuz remains closed and the U.S. backs its threats to block Iranian ports, starting today, oil prices could skyrocket towards $130. And institutions could start playing it safe by selling off riskier assets like crypto.
For Bitcoin, all eyes will be on the $68,000 and $65,000 support levels, which have been repeatedly tested since Q1. A break below these key supports would trigger the negative gamma zone, where market makers are forced to sell more Bitcoin, leading to a drop below $60,000. This scenario would see the total market cap fall from $2.4 trillion toward the $2.1–$2.2 trillion range.
Prolonged Conflict and Deeper Losses
Our worst-case scenario assumes the U.S. and Iran refuse to return to the negotiation table and the conflict resumes. If the U.S. attacks Iran’s infrastructure and Iran resumes drone strikes on U.S. allies, crypto assets could post more losses in Q2, like the last two quarters.
Bloomberg Intelligence strategist, Mike McGlone, has made a Bitcoin price prediction of $10,000. Although it sounds ridiculous, he argued that the number 1 crypto has lost excitement and is now vulnerable to movements in the stock market. While this is extreme, as it reflects BTC would lose over 85% of its current value, it still shows how analysts and traders are pricing the market.
Unless geopolitical tensions ease and something changes, the crypto market could see an extended decline before a recovery phase emerges.
When Could the Crypto Crash End?
The end of the current crypto crash will have to come from favorable geopolitical factors. This means that the U.S. and Iran would resume their peace talks, and the Strait of Hormuz would reopen to oil tankers—and that would lift the pressure off of the crypto market.
However, if the peace talks fail entirely or no ceasefire extensions are agreed, the conflict might extend into Q3. That would keep oil prices high and rate hikes in the U.S. will become more likely. Such a scenario would be bad news for crypto assets, leading to massive selloffs.
What would make the crypto crash finally end is Iran and the U.S. settling their differences and calling off the war, and the CLARITY Act passing. If those happen by the end of the month, then crypto would start rallying again.
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