Bitcoin Volatility Driven by Geopolitical Factors

On March 5, 2025, Bitcoin experienced extreme volatility, with its price dropping sharply from $65,000 to $58,000 due to a large institutional sell-off and later surging following geopolitical news and market sentiment shifts. A major hedge fund liquidation led to a cascade of sell orders, exacerbated by automated trading algorithms, causing a 10.77% drop in Bitcoin's price within two hours. However, geopolitical developments, such as Trump's tariff rollback on Canada and Mexico, and China's aggressive stance towards the USA, triggered a rebound, with Bitcoin prices briefly climbing to $67,500. The announcement from Trump about a U.S. strategic crypto reserve also led to a record-breaking $10,000 gap in CME Bitcoin futures, indicating bullish market sentiment. This volatility highlights the impact of macroeconomic and geopolitical factors on cryptocurrency markets, underscoring the need for effective risk management strategies among traders.