Crypto Market Plummets 4% Amid Israel Iran Conflict

The cryptocurrency market has experienced significant volatility following Israel's airstrikes on Iran, with both Bitcoin and major altcoins feeling the impact. Altcoins such as Solana (SOL) and Cardano (ADA), which have lower liquidity compared to Bitcoin, were among the hardest hit, losing substantial value in the process.

Bitcoin, the largest asset in the cryptocurrency market, was trading sideways at $105,600 at the time of writing, despite falling by as much as 3%. The market's reaction to the geopolitical tension has been negative, with investors seeking safe havens such as government bonds. Stocks fell, oil prices rose more than 9%, and gold gained value as investors prioritized liquidity over narrative in high-risk moments like military conflict.

According to Caroline Mauron, co-founder of Orbit Markets, the crypto market is reacting negatively to the news of Israel’s attack on Iran, in line with other risk assets. Technically, support is expected at $101,000, but geopolitical developments will determine price action in the short term. Sean McNulty, head of derivatives Asia-Pacific at FalconX Ltd., noted that while Bitcoin is sometimes traded as a macroeconomic hedge, in high-risk moments like military conflict, investors prioritize liquidity over narrative. Positions are closed to generate cash, dollars are diverted, and leverage is reduced in volatile assets.

The market sentiment has soured as the conflict in the Middle East escalates, with Bitcoin's price edging below $105,000 on Friday after falling 4% over the last two days. This has led to over $1 billion in crypto liquidations, with Bitcoin and Ethereum showing significant declines. However, history suggests that a recovery may be around the corner in a matter of days, so long as the tension does not escalate further. According to the analyst's forecast, the main level for Bitcoin could drop by as much as 50% due to the involvement of the USA in the conflict. This is a stark contrast to the previous Iran-Israel war, which caused a 35-40% drop in Bitcoin. The market is expected to remain cautious over the weekend, with a tight correlation to global markets. This is likely to result in continued volatility in the crypto market, as investors react to the geopolitical developments.