Key Points
- Bitcoin (BTC) experienced a significant sell-off due to escalating Israel-Iran tensions.
- The geopolitical situation led to a risk-off approach among investors, affecting the entire crypto market.
Bitcoin (BTC), the world’s largest cryptocurrency, saw a sharp decline of nearly 4% on October 1st, marking a weekly loss of approximately 10%.
This drop from a high of $65K to a low of $60.1K occurred amid escalating tensions between Israel and Iran, triggering a broad sell-off in the crypto market.
Israel-Iran Tensions Influence Crypto Market
Tensions between Israel and Iran, which have been ongoing for years, reached a new high on October 1st with Iran reportedly launching a barrage of missiles at Israel in retaliation for an Israeli ground offensive in Lebanon.
This situation led investors to adopt a risk-off mode, fearing the possibility of a devastating regional war.
US equities, particularly tech stocks, experienced a significant sell-off, with the Nasdaq Composite declining by 1.5% and the S&P 500 Index shedding 0.93%.
Bitcoin followed this trend with a nearly 4% drop, bringing it down to near $60K.
Other Cryptocurrencies Affected
Ethereum (ETH) experienced the most significant sell-off among major cryptocurrencies, with a 6% drop on the daily charts.
On October 1st, US spot BTC ETFs also saw $242.5 million in daily outflows, the highest since early September, indicating a shift in investor sentiment towards risk-off.
This trend aligns with Bitcoin’s risk-on status and its strong positive correlation with US stocks.
Quinn Thompson, founder of Lekker Capital, suggested that the geopolitical situation could influence US elections, but he expects the tensions to subside in the short term.
QCP Capital also noted a similar potential short-term impact of the tensions, but suggested that the market remains well-bid for risk assets.
If Thompson’s predictions are accurate, Bitcoin and the overall market could rebound soon.
In the meantime, $58K is a key level to watch if the sell-off intensifies and Bitcoin falls below $60K.
