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Bitcoin prices tumbled on Friday, as escalating tensions in the Middle East, following Israel’s large-scale airstrikes on Iran, triggered a broad flight from risk assets. The world’s largest cryptocurrency fell 3.6%, dropping to $104,070.20 as of 02:14 ET (06:14 GMT).
Risk-Off Sentiment as Israel Strikes Iran
Israel launched “Operation Rising Lion,” targeting numerous Iranian facilities, including uranium enrichment sites in Natanz, missile production plants, and military command centers in Tehran. The operation was aimed at pre-empting Iran’s nuclear ambitions.
Explosions reverberated across Tehran, while Israel enacted state emergency measures, and Iran activated its air-defense systems in response. Iran quickly vowed harsh retaliation, warning that its response could threaten regional stability. Israeli Prime Minister Benjamin Netanyahu stated that the military campaign would continue “for as many days as it takes to remove this threat,” urging citizens to prepare for potential Iranian counterattacks.
The military escalation in the Middle East triggered a flight to safety across various asset classes. Traditional safe-haven assets such as gold, the U.S. dollar, Japanese yen, Swiss franc, and U.S. Treasuries surged, while cryptocurrencies, often viewed as risk-sensitive, suffered sharp declines.
Institutional Caution and Fed Rate Decision Looming
Institutional caution during periods of political instability was amplified by the looming U.S. Federal Reserve rate decision, set for next week. The Fed is expected to keep interest rates unchanged, with markets pricing in the potential for rate cuts later this year.
Investors are closely monitoring Iran’s response, including the risk of disruptions at the Strait of Hormuz, a critical chokepoint for global oil supply. Until geopolitical clarity improves, the cryptocurrency sector is likely to remain tethered to broader risk sentiment, with investors shifting away from speculative assets.
Altcoins Follow Bitcoin Lower
Most altcoins mirrored Bitcoin’s losses, with many experiencing steep declines amid the broader risk-off sentiment.
- Ethereum (ETH), the second-largest cryptocurrency, slumped 9.8% to $2,497.82.
- XRP, the third-largest cryptocurrency, fell 8% to $2.0988.
- Solana (SOL) plunged 10.4%, while Cardano (ADA) also dropped nearly 10%, and Polygon (MATIC) slipped 10.4%.
- Among meme tokens, Dogecoin (DOGE) tumbled 10%, and $TRUMP lost 6.5%.
The sharp drop in Bitcoin and other cryptocurrencies reflects broader market sentiment driven by rising geopolitical tensions and the flight to safety. As Israel’s military actions in Iran stir concerns over regional instability, cryptocurrencies, seen as risk-sensitive assets, have come under pressure. With uncertainty surrounding the geopolitical landscape and the upcoming Fed decision, the crypto market is likely to remain volatile and tied to global risk sentiment for the foreseeable future.
