Bitcoin and other cryptocurrencies experienced significant price declines following an airstrike by Israel on Iran, which escalated geopolitical tensions. According to Bloomberg data, Bitcoin's price dropped by as much as 3%, falling below $103,000, before slightly recovering. Ethereum, the second-largest cryptocurrency, saw a market value drop of approximately 7.6%.
The market sell-off occurred after reports of explosions in Tehran, with Israel's Defense Minister announcing a state of emergency due to preemptive strikes on Iran. He warned of potential retaliatory attacks from Iran involving drones and missiles.
Caroline Moron, co-founder of crypto derivatives liquidity provider Orbit Markets, noted that cryptocurrencies reacted negatively to the news, aligning with the movement of major risk assets. She highlighted technical support for Bitcoin around $101,000 but emphasized that geopolitical developments would dominate short-term price movements.
Investors quickly moved to safe-haven assets like U.S. Treasuries, leading to declines in stock markets and futures. Oil prices surged over 9%, and gold also rose. Sean McNulty from FalconX Ltd observed that Bitcoin's decline indicates that during military conflicts, liquidity takes precedence over its narrative as a macro hedge.
Over $1 billion worth of long positions in cryptocurrencies were liquidated in the past 24 hours, according to Coinglass data. IG market analyst Tony Sycamore warned of further deterioration in risk sentiment.
