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Bitcoin fell more than 6% early on Tuesday as a result of Iran’s missile attack on Israel, which intensified tensions in the Middle East. As soon as the market for cryptocurrencies opened up, Bitcoin dropped to its present level, a little below $61,000.
Bitcoin had already fallen from about $62,200 earlier in the day, which contributed significantly to a phenomenon: volatility that sparked dissatisfaction around the world. Fearing what this war might bring, investors rushed away from the riskier assets like Bitcoin and sought traditional safe havens in gold.
How The Market Responds To Political Unrest
Military strife wasn’t the only thing that happened during the missile strikes; they also shook the financial markets. As tensions rose, the US government revealed that President Joe Biden had ordered military aid for Israel.
Investors are now even more worried about the effects of this intervention on global security and the possibility of a worsening of the situation. As news feeds were filled with stories of missile launches, Bitcoin’s value dropped by about $3,800 in just a few hours. It fell for a short time to around $60,200, but later in the day it slowly climbed to around $61,500.
It was a bearish October, also the so-called “Uptober” for its historical gains in the past, and this is what the traders were hoping for, but chaos dashed that dream. Big liquidations on huge cryptocurrencies made the selloff even worse.
Positions in Bitcoin and Ethereum alone lost over $481 million. In the past, geopolitical situations have caused sharp drops in crypto values, which shows how sensitive Bitcoin is to events happening around the world.
Gold Unfazed, Crypto Takes A Beating
Curiously, as Bitcoin was losing out, gold prices surged 1.2% to touch near record-highs as uncertainty-fearing investors sought safety. In reality, this is not a new pattern that one has seen before. People have seen this pattern in the Russia-Ukraine tensions and the brewing tensions between the US and China.
Traditionally, Bitcoins have rallied well after initial declines on global tumult. But there are still traders who want to hedge the price and rush to decrease their investments, causing the price to go down.
The way things are now makes many wonder where Bitcoin and other cryptocurrencies will go in the future. Analysts believe Bitcoin might test the $60,000 support – or lower – if things worsen.
Featured image from The Times of Israel, chart from TradingView
