In President Donald Trump’s newly announced national cyber strategy, virtual assets and blockchain have entered the spotlight for the first time at the highest levels of U.S. security planning. The move places blockchain within the federal cyber framework, signaling heightened government attention and potential regulatory implications for the crypto sector. Investors are weighing the symbolism of this shift as well as its potential practical impact. Analysts note that about 43.4% of Bitcoin supply is currently underwater, a sign of mounting stress in the market, while Glassnode data show such losses mirror early downturns in past cycles.
Historically, more than half of Bitcoin’s supply has been in loss before bottoms form and prices rebound. The current 43.4% underwater suggests the market may be near a bottom, but experts say capitulation has not yet occurred. Analysts expect further pain until the loss volume reaches a clearly defined threshold, during which many short-term holders could be forced to liquidate. As price declines persist, newly inflowing capital is swept into loss territory, dampening buying interest and amplifying volatility on even modest sell pressures.
As fighting between the United States and Iran intensifies, Goldman Sachs warns of a broader, multi-week downturn for the crypto market. CEO David Solomon cautioned that geopolitical risk will dampen investor risk appetite, potentially triggering large-scale price corrections across Bitcoin and Ethereum. Oil prices and inflation concerns are cited as key drivers of market uncertainty and the downturn. Solomon noted the current environment could mark a structural bear market that may persist for weeks as institutions shift toward safety and liquidity drains.
Market participants are closely watching the response as the warning lands. Analysts expect lasting psychological impact and potential shifts in liquidity as the market reassesses risk.
On-chain data show about 43.4% of Bitcoin circulating supply trades below the price at which it was acquired, a pattern historically associated with downturns, according to NewsBTC (March 9). Glassnode’s metrics align with early-stage slumps in 2018 and 2022, indicating many holders remain underwater and could add to selling pressure. Analysts note that while the losses imply the market is near a bottom, true capitulation has not yet occurred, suggesting pain may persist as weak hands are wiped out and liquidity tightens. The ongoing price declines and dwindling liquidity point to heightened volatility ahead.
Goldman Sachs has warned that the market could endure a broader, multi-week downturn as geopolitical tensions persist and the Federal Reserve’s policy path remains unclear. The combination of higher energy prices, inflation concerns, and risk-off sentiment may depress demand for non-yield assets like BTC and ETH. With ETF inflows cooling and market liquidity thinning, prices could test key support levels, underscoring the need for cautious risk management. Solomon emphasized that it will take considerable time for the market to stabilize, and investors should prepare for the worst-case scenario.
As the war between the U.S. and Iran evolves into a defining variable for the crypto market, investors are closely watching daily developments. Geopolitical tensions are intensifying the challenge to Bitcoin’s case as digital gold, but the path remains uncertain. Market participants are monitoring whale fund flows and liquidity shifts across major exchanges to adjust strategies.
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