The cryptocurrency market experienced a significant downturn following an Iranian drone attack on Israel, leading to a widespread sell-off of digital assets.
Bitcoin, the largest cryptocurrency, saw a 7.7% decline on Saturday, marking its most substantial retreat since March 2023.
Although the token managed to recover some losses and was trading around $64,000 on Sunday, other major coins like Ether, Solana, and Dogecoin also suffered 24-hour losses.
Iran Hits Israel in Retaliation for Syria Strike
The attack by Iran, which involved drones and missiles, was seen as a retaliation for a strike in Syria that resulted in the deaths of top Iranian military officials.
This escalation of conflict in the region created an atmosphere of uncertainty, which impacted traditional markets on Friday and spilled over into the cryptocurrency market during the weekend.
Cryptocurrencies trade continuously, providing investors with insights into market sentiment before traditional markets reopen on Monday.
However, it should be noted that conditions can change rapidly during this period.
The tension between Iran and Israel had negative repercussions on stocks and prompted investors to seek safety in assets such as bonds and the US dollar.
Coinglass data revealed that approximately $1.5 billion worth of bullish crypto wagers using derivatives were liquidated over the course of Friday and Saturday, making it one of the largest two-day liquidations in at least six months.
The high level of leverage in the market contributed to the significant price deterioration of digital assets during this period.
Bitcoin’s current price is approximately $10,000 lower than its mid-March record of $73,798.
The launch of dedicated US exchange-traded funds (ETFs) earlier this year had helped drive the token to an all-time high, but recent inflows into these products have slowed down.
How Would Bitcoin Halving Impact Markets?
Crypto speculators are eagerly anticipating the upcoming Bitcoin halving, expected to occur around April 20.
This event will reduce the new supply of Bitcoin by half and has historically been a positive factor for price increases.
However, given that Bitcoin recently hit a historical peak, doubts have arisen regarding whether the halving will have the same impact this time around.
For one, billionaire Arthur Hayes has expressed a cautious view regarding the upcoming Bitcoin halving and the effects it will have on the price of the asset.
While many experts anticipate a significant rally for Bitcoin following the halving event, Hayes believes that the price action before and after the event could actually be negative.
Likewise, Coinbase has warned that the time of year could pose challenges for an upward momentum as traders await a price surge ahead of Bitcoin halving.
On the other hand, some industry executives, such as Ripple CEO Brad Garlinghouse, remain optimistic.
Garlinghouse predicts that the total market value of cryptocurrencies will double this year, largely driven by spot ETFs and Bitcoin halving.
He believes that the introduction of real institutional money through ETFs is a significant factor contributing to this positive outlook.
“I’m very optimistic. I think the macro trends, the big picture things like the ETFs, they’re driving for the first time real institutional money,” he told CNBC on April 7.