Bitcoin fell more than 6% early Tuesday as the Iranian missile attack on Israel intensified tensions in the Middle East. As soon as the cryptocurrency market opened, Bitcoin fell to its current level, just below $61,000.
Bitcoin had already fallen from around $62,200 earlier in the day, significantly contributing to a phenomenon: volatility that was causing discontent around the world. Fearing what this war could bring, investors rushed away from riskier assets like Bitcoin and sought traditional safe havens in gold.
How the market responds to political unrest
Military conflict wasn’t the only thing that happened during the rocket attacks; they also shocked the financial markets. As tensions rose, the US government revealed that President Joe Biden had ordered military aid to Israel.
Investors are now even more concerned about the effects of this intervention on global security and the possibility of a worsening of the situation. While the news feeds were full of stories about rocket launches, The value of Bitcoin fell with approximately $3,800 in just a few hours. The price briefly fell to around $60,200, but slowly rose to around $61,500 later in the day.
BTCUSD trading at $61,217 on the daily chart: TradingView.com
It was a bearish October, also called “Uptober” because of the historic gains in the past, and this is what traders were hoping for, but chaos put an end to that dream. Major liquidations of massive cryptocurrencies made the sell-off even worse.
Positions in Bitcoin and Ethereum alone lost more than $481 million. In the past, geopolitical situations have led to sharp declines in crypto values, demonstrating how sensitive Bitcoin is to events around the world.
Gold Unfazed, Crypto Takes a Beating
Oddly enough, like Bitcoin lost it, gold prices rose 1.2% to near record highs as uncertainty-fearing investors sought safety. In reality, this is not a new pattern that has been seen before. People have seen this pattern in the tensions between Russia and Ukraine and the increasing tensions between the US and China.
Traditionally, Bitcoins have recovered well after initial declines due to the global turmoil. But there are still traders who want to hedge the price and rush to reduce their investments, causing the price to fall.
The way things stand now has many wondering where Bitcoin and other cryptocurrencies will go in the future. Analysts believe Bitcoin could test support at $60,000 – or lower – if things deteriorate.
Featured image from The Times of Israel, chart from TradingView