BENGALURU: The rising geopolitical tensions have impacted the cryptocurrency market as Bitcoin fell below USD 61,000 on Wednesday, which is nearly a 4% decrease over 24 hours.
The recent decline in Bitcoin, dropping to USD 61,000 after reaching USD 64,000, alongside dips in the S&P and Nasdaq, reflects a broader market reaction to escalating geopolitical tensions between Iran and Israel, said Edul Patel, CEO of Mudrex.
He said market volatility in response to such conflicts is not unusual, as uncertainty often prompts investors to adopt a risk-off approach, moving away from riskier assets like cryptos and equities.
"For now, investors are more likely to adopt a cautious stance, closely monitoring developments, which may result in more conservative market participation temporarily," Patel said.
Bitcoin was trading at the USD 64,000 level last month. Ethereum (USD 2,426) and Solana (USD 144) were also down 7.06% and 7.11%, respectively over the last 24 hours.
Vikram Subburaj, CEO, Giottus Crypto Platform, said crypto continues to be the first asset class to react to changes in the global macro conditions. "When a new scenario comes up, there is less clarity on where we are headed and if there can be further escalations. This results in price volatility among crypto assets. In line with this, Bitcoin and crypto dropped sharply overnight after an escalation in the Middle East.
Geopolitical tensions modify the existing equilibrium and can continue to induce volatility until crypto finds a new equilibrium.
However, exchanges are hopeful and bullish about crypto in October and November given the US elections next month. "There is an expectation that in the event of a regime change, we might see geopolitical de-escalations along with pro-crypto government policies in the US. Within crypto, Bitcoin should hold up better compared to the rest of the market given its growing narrative as a digital store of value," he added.