Bitcoin experienced a sharp decline, its largest in over a year, amid a broader drop in cryptocurrency markets. This was triggered by rising geopolitical tensions in the Middle East, leading to a risk-averse sentiment among investors.
The main cryptocurrency dropped by 7.7% on Saturday, its biggest retreat since March 2023. However, it partially recovered and was trading at around $63,700 on Sunday morning in Singapore. Other major coins like Ether, Solana, and Dogecoin, which has a strong following from the “meme-crowd,” also saw losses in the past 24 hours.
The tension in the Middle East escalated as Iran launched attack drones and missiles against Israel in retaliation for a strike in Syria that killed top Iranian military officers. This has put the region in a dangerous new phase. While traditional markets are closed on weekends, cryptocurrency trading remains open, giving investors an idea of the market sentiment before the markets reopen on Monday. However, the situation can change significantly by then.
According to Zaheer Ebtikar, founder of crypto fund Split Capital, if the tension continues to escalate, it is likely that the crypto selloff will also continue. People will closely monitor the situation and its impact on the markets when they reopen on Monday.
The tension in the Middle East has also affected traditional markets, with stocks dropping and havens like bonds and the dollar gaining. The Coinglass data shows that over $1.5 billion worth of bullish crypto positions were liquidated on Friday and Saturday, one of the heaviest two-day liquidations in the past six months. Ebtikar believes that leverage has played a significant role in the decline of digital assets in the last three days.
Bitcoin has dropped by approximately $10,000 since its mid-March record of $73,798. The demand for dedicated US exchange-traded funds, which launched in January, helped the token reach its all-time high. However, there has been a slowdown in net inflows into these products recently.
Many crypto speculators are anticipating the upcoming Bitcoin halving, which will reduce the token’s new supply by half and is expected to occur around April 20. This event has historically been a positive factor for prices, but some doubt its impact this time as Bitcoin has recently reached a historical peak.
As geopolitical tension continues to rise in the Middle East, the crypto market remains volatile, and investors are closely monitoring the situation. This story continues to develop, and its impact on the markets will be observed when they reopen on Monday.
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