Prices of Bitcoin and other cryptocurrencies fell after Israel launched air strikes on Iran, escalating the situation significantly. The price of the largest digital asset plunged as much as 3% to below $103,000 on Friday morning Singapore time, before narrowing its losses, according to data compiled by Bloomberg. The second-ranked coin, Ethereum, wiped out about 7.6% of its market value at one point.
According to local media reports, the market sold off after explosions were heard in Tehran. Israeli Defense Minister Israel Katz stated that he declared a special state of emergency in view of Israel's "launching a preemptive strike against Iran." Katz said Israel is expecting Iran to launch drone and missile retaliatory attacks.
Caroline Moron, co-founder of Orbit Markets, a crypto derivatives liquidity provider, noted: "Cryptocurrencies reacted negatively to news of Israel's attack on Iran, in line with the trend of major risk assets. We expect technical support around $101,000, but geopolitical news will dominate price movements in the short term."
Immediately after the attack, investors poured into safe-haven assets such as U.S. Treasury bonds, and stock markets and stock index futures fell simultaneously. Crude oil prices surged more than 9%, and gold followed suit.
Sean McNulty, head of Asia-Pacific derivatives trading at digital asset institutional broker FalconX Ltd, said that Bitcoin's decline shows that although it is "occasionally used as a macro hedging tool, in such moments of emergency risk - especially when involving military conflict, liquidity will take precedence over narrative logic. Traders will raise cash, move to the dollar, and reduce leverage or high volatility exposure."
Over $1 billion worth of long positions across all cryptocurrencies were liquidated in the past 24 hours, according to Coinglass data.
"Risk sentiment is likely to deteriorate further" before the weekend, IG market analyst Tony Sekomore said in a note.
Bitcoin was trading at $103,540 at 10:40 a.m. Singapore time on Friday.