Bitcoin Plunges Amid Iran-Israel Tensions, Global Markets on Edge

Amid escalating tensions between Iran and Israel, Bitcoin faced significant challenges, witnessing its most substantial decline in over a year. The broader cryptocurrency market also experienced a downturn due to heightened geopolitical risks in the Middle East, prompting risk aversion among investors.

On Saturday, Bitcoin recorded a 7.7% decline, marking its largest retreat since March 2023. Despite a partial recovery, the cryptocurrency was trading around $63,230 by Sunday morning in Singapore. Similarly, other major cryptocurrencies like Ether, Solana, and Dogecoin saw losses over the past 24 hours.

Following Iran’s attack on Israel using drones and missiles, tension in the region intensified, raising concerns globally. With digital assets trading throughout the weekend, investors awaited clues about market sentiment ahead of Monday’s traditional market reopening.

Zaheer Ebtikar, founder of crypto fund Split Capital, suggested that the continuation of the crypto selloff hinges on further escalation of geopolitical tensions. The recent spike in tension impacted stocks on Friday, driving investors toward safer havens such as bonds and the dollar.

Data from Coinglass revealed approximately $1.5 billion in bullish crypto wagers via derivatives were liquidated over Friday and Saturday, marking one of the heaviest two-day liquidations in six months. According to Ebtikar, excessive leverage contributed to the substantial price decline in digital assets.

Bitcoin, currently down about $10,000 from its mid-March peak, had witnessed increased demand from dedicated US exchange-traded funds earlier in the year. However, recent net inflows into these products have tapered off.

Speculators are now eyeing the upcoming Bitcoin halving, slated to reduce the token’s new supply by half around April 20. While historically a price catalyst, doubts loom over whether the halving will drive a significant uptick in prices this time, especially after Bitcoin recently reached a historical peak.