Bitcoin dropped to around $60,000 Wednesday following Iran’s missile strikes on Israel. The strikes were in retaliation for Israel’s killing of militant leaders and its aggression in Lebanon against Hezbollah.
Concerns about a broader regional war involving Iran and the US have grown as Israel escalates its assault on Lebanon.
Bitcoin fell by 3.1% to around $61,616 on the day, and has dropped 4.4% over the past week. This decline is mainly due to growing uncertainty and increased risk aversion in financial markets, driven by geopolitical tensions.
As a result, investors tend to sell off riskier assets like cryptocurrencies, directly impacting Bitcoin’s price.
White House Dispatches US Military Support to Israel as Tensions Escalate
Reports highlighted the severity of the situation as President Joe Biden and Vice President Kamala Harris gathered in the White House Situation Room. They reportedly deployed US military assets to reinforce Israel’s defense.
Reports indicate Iranian missiles were mostly intercepted with help from US naval destroyers. Still, “a few hits” occurred, according to Israeli military spokesman Daniel Hagari.
Crypto Markets React to Iran-Israel Tensions
Mitchell Nixon, chief research officer at Imperial Wealth, pointed out that the current Bitcoin decline mirrors past drops in April and July. Both were triggered by rising tensions in the Middle East, prompting a sell-off in crypto assets.
On Sept. 30, 2024, Bitcoin spot ETFs saw net inflows of $61.2m, marking an 8-day positive streak. However, on Oct. 1, the trend reversed with a substantial outflow of $242.5m, data from SoSoValue showed.
In contrast, Ethereum spot ETFs ended Sept. 30 with an outflow of $822,300. This outflow worsened on Oct. 1, surging to $48.52m.
“Beyond geopolitical concerns, traders were also securing profits ahead of the upcoming Federal Open Market Committee meeting,” Nixon wrote in a Wednesday note.
“Data from CoinGlass indicates substantial outflows from major cryptocurrencies including Bitcoin, Ethereum, and Solana, with sellers outnumbering buyers in the current market climate.”
Despite the ongoing tensions, Nixon highlighted that Bitcoin has marked its strongest September close in over a decade, since before 2013.
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