- The crypto market shed over $200 billion amidst escalating tensions in the Middle East.
- Many cryptocurrencies have recorded double-digit losses.
- Market participants fear the conflict is reminiscent of the events of 2022.
Geopolitical tensions are reaching alarming levels amid escalating tensions in the Middle East, particularly with Iran’s recent aggressions toward Israel. The conflict is impacting not only the region but also the crypto market, with prices of many assets, including Bitcoin and Ethereum, wobbling, triggering widespread panic in the market.
Crypto Market Plummets Following Rising Tensions
On Saturday, April 13, the cryptocurrency market tumbled precipitously as tensions in the Middle East flared up after the Israeli Military confirmed that Iran unleashed a barrage of missiles and drones on the nation.
Bitcoin, which peaked at $68,000 earlier that day, plummeted by over 9% to $60,000. Mirroring the chaos, Ethereum also experienced a 12% blow, dropping below $3000, the most significant intraday decline since November 2022. Other tokens like BNB, Solana, and ADA saw double-digit losses of up to 20% amidst rising turmoil in the market.
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According to CoinGlass, the crypto market as a whole shed over $260 billion from its total market capitalization, coupled with a $1 billion liquidation across crypto-tracked futures.
Iranian officials cited the attack as retaliation for Israel’s assault on its embassy in Damascus on April 1. They justified their actions as ‘legitimate defense’ under Article 51 of the UN Charter. Following this announcement, Bitcoin pared a significant portion of its losses, rebounding from $60,000 to $65,000 in a few hours.
Rising tensions in the Middle East are reminiscent of the events of 2022 when the war between Russia and Ukraine sparked an enduring bear market. As the conflict in the region continues to mount, investors are on edge amid the heightened uncertainty in the market.
Bitcoin Risks Sparking Another Bear Run Amid Rising Tensions
Previously, in 2022, the cryptocurrency market was euphoric, especially after reaching new highs in 2021, with many altcoins also showing promise. However, escalating geopolitical tensions poured cold water on market sentiments, leading Bitcoin and the overall crypto market to endure a two-year bear run.
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Following Russia’s aggression against Ukraine in February 2022, Bitcoin plummeted from $50,000 to $16,000 in nine months. With tensions in the Middle East rising, market participants fear the market could follow a similar trajectory.
Further complicating matters is the upcoming halving event on April 20, which could precipitate another round of selling pressure from miners and market participants. The following weeks will be pivotal in determining Bitcoin’s trajectory for the remainder of the year, with its performance hinged on whether it continues its upward momentum or succumbs to further downside pressure.
On the Flipside
- The crypto market saw over $240 million in liquidations after Russian troops moved to Ukraine in 2022.
- The US Treasury testified to the overestimation of Hamas’s reported crypto use, emphasizing that it only constituted a minimal fraction of the group’s funding.
- The US Treasury alleged that terrorist organizations like the Iranian Revolutionary Guard Corps use cryptocurrencies for illicit activities, calling for stricter regulations within the industry.
Why This Matters
The escalating tensions in the Middle East could instill significant fear and uncertainty in the crypto market, potentially leading to even heavier losses.
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