The cryptocurrency market experienced a significant downturn on Tuesday, with leading digital assets like Bitcoin and Ethereum plummeting amidst heightened geopolitical tensions. The trigger? Iran’s barrage of missiles towards Israel, sparking fears of a full-blown conflict in the Middle East.
Bitcoin, the world’s largest cryptocurrency by market capitalization, plunged to a two-week low of $60,370 as news of the missile attack broke. Although it recovered slightly to around $61,000 after the attack concluded, the initial drop highlighted the market’s sensitivity to geopolitical events.
Ethereum, the second largest cryptocurrency, suffered a more severe drop, crashing to levels not seen since August 19th. The overall cryptocurrency market experienced a wave of liquidations, exceeding $521 million in the past 24 hours – the highest since the Black Monday meltdown in August. This liquidation spree erased nearly $450 million in bullish bets, highlighting the shift in market sentiment.
The Cryptocurrency Fear & Greed Index, a popular gauge of market sentiment, plunged into the “Fear” zone, indicating significant fear, uncertainty, and doubt (FUD) among investors. This fear translated into selling pressure, causing Bitcoin’s Open Interest to drop by 4.79% and Ethereum’s by 5.6% in the past 24 hours.
However, while the market experienced a downward trend, some cryptocurrencies bucked the trend, registering gains. FTX Token (FTT), EigenLayer (EIGEN), and Wormhole (W) were among the top gainers, with increases of 12%, 11.24%, and 5.32% respectively.
The global cryptocurrency market capitalization stood at $2.14 trillion, reflecting a 4.16% contraction over the previous 24 hours. The stock market also felt the pinch, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all experiencing losses.
The geopolitical tensions also impacted other asset classes. War fears drove crude oil prices higher, with West Texas Intermediate (WTI) rising by 1.66% to $70.86 a barrel. Spot gold, considered a safe-haven asset, initially rose above $2,660 per ounce but retreated later after the missile attack ended.
Legendary trader Peter Brandt pointed out that Bitcoin’s recent rally did not disrupt its 7-month trend of lower highs and lower lows. He believes that a close above $71,000, confirmed by a new all-time high, would be necessary to indicate a potential trend reversal.
MartyParty, a prominent cryptocurrency commentator, attributed the intense sell-offs to “big whales,” suggesting that they manipulated the market using war narratives to eliminate bullish positions and accumulate more tokens. He urged his followers not to fall prey to such manipulation.
The market’s volatility in response to the Iran-Israel conflict serves as a stark reminder of the importance of diversification, risk management, and staying informed in the dynamic world of cryptocurrencies.
