Bitcoin nosedives 7% as geopolitical tension in Middle East escalates, altcoins follow

BTC corrects amid war tensions: Bitcoin corrected downwards by 7.1 per cent to $62,346 at 20:31 GMT on Saturday with a decline of $5,050 within 24 hours. This marks the leading cryptocurrency to lose a 15.8 per cent of its price from the year-high of $73,794 recorded on March 14th. However, after a strong correction, Bitcoin has recovered above the $64,000 mark with investors investing in the currency amid the strong halving speculations. 

The nosedive in Bitcoin prices is being attributed to Iran’s attack on Israel that has escalated geopolitical tensions in the Middle East. The Israeli army reported that Iran had launched multiple drones into Israeli territory, while Iran's Revolutionary Guard simultaneously took responsibility for missile strikes against Israel. The scale of the alleged attacks is huge, with nearly 150 missiles and 600 suicide drones reportedly used. 

Bitcoin’s value dipped from approximately $67,000 to $61,625, erasing more than $130 million in market capitalisation within minutes following the incident.

Strong decline in crypto volumes | Image credit: CoinGlass

The massive selloff in Bitcoin is followed by strong corrections in Ethereum, BNB, Solana, XRP, Dogecoin, Cardano, Avalanche, Shiba Inu, Bitcoin Cash, and Polkadot, all of them down by close to 5 per cent in the last 24 hours. 

90 of the top 100 cryptos by market capitalisation are currently trading in red | Image credit: CryptoBubbles 

The crypto fear and Greed Index have also recorded a month low as investors move towards moving their investments towards stable investments such as gold and bonds amid escalating geopolitical instability. 

Crypto Fear and Greed Index | Image credit: CoinMarketCap 

However, the crypto market has shown a strong recovery after the nosedive as strong anticipation around halving is inviting investors to make new positions at a significantly lower price. 

Further escalating the tensions, Jordan on Sunday opened its airspace for the Israeli military in a bid to intercept and shoot down Iranian drones and missiles. Jordan's unexpected move is seen as a direct violation of Iran's warnings. Even Western allies in the Middle East, including Qatar and Kuwait, banned the use of their airspace against Iran.

If the tension escalates further in the Middle East, a clear effect on the prices of Bitcoin will be seen in the coming days, right before the Bitcoin halving which is expected to take place on 19 April 2024.