Bitcoin Price Nosedives Amid Middle East Unrest and Investor Panic
Crypto Market Takes a Hit: Bitcoin Drops 5.7% to $60,168, Largest Decline Since September; Major Altcoins and ETFs Also Plummet.
Key Takeaways:
- Bitcoin's price dropped 5.7% to $60,168 on October 1, the largest decline since September 6.
- Ether fell over 6%, Dogecoin by 10%, and Avalanche slipped by more than 7%.
- 11 US spot Bitcoin ETFs also recorded a $242.6 million outflow, the biggest since September 3.
Bitcoin’s price dropped by 5.7%, while US spot BTC ETFs saw outflows of $243 million on October 1. The sell-off came as rising tensions between Iran and Israel led investors to abandon risk assets in favor of safer options like bonds, oil, gold, and the U.S. dollar. This shift challenged the perception that digital assets like Bitcoin can act as a “safe haven” during periods of global instability.
Bitcoin Price Decline Questions “Safe Haven” Perception
As tensions rise in the Middle East, particularly between Iran and Israel, traditional safe-haven assets like gold and oil are seeing gains.
On October 1, gold prices jumped 1.4% to $2,665 per ounce, nearing its record high. Meanwhile, crude oil prices skyrocketed 7% to $72 per barrel. Additionally, the value of the U.S. dollar and bonds also experienced significant gains.
In stark contrast, Bitcoin's price fell dramatically by almost $4,000, dropping from an intraday high of $64,000 to $60,315 at 20:40 UTC. Though it has since recovered to around $61,631, the overall trend is concerning.
Bitcoin’s Price dropped $4,000 on October 1
Other major cryptocurrencies were also affected, with Ether falling more than 6% and Dogecoin tumbling 10%. Avalanche slipped over 7%, as Solana and Cardano recorded 8% and 7.5% losses, respectively.
The total market cap for cryptocurrencies has dropped by 4.22%, reaching $2.17 trillion, thus reflecting the broader negative sentiment permeating the financial markets following Iran's attacks.
The attacks by Iran were significant, involving a barrage of ballistic missiles aimed at Israeli targets. Iran stated that this action was a response to the killings of leaders from Hamas, Hezbollah, and the Islamic Revolutionary Guard Corps.
This escalating conflict has created a climate of uncertainty, which has caused many investors to adopt a risk-off approach, withdrawing from volatile assets like cryptocurrencies. Despite Bitcoin's reputation as “digital gold,” the recent price drop compared to rising gold prices highlights the growing skepticism about its stability as a safe asset.
Middle East Conflict Causes US Bitcoin ETFs to Plummet
Institutional investors have reacted sharply to the rising tensions in the Middle East, causing substantial outflows from US spot Bitcoin ETFs. On October 1, eleven ETFs recorded combined outflows of $242.6 million, the largest since September 3.
The Fidelity Wise Origin Bitcoin Fund led the sell-off, losing $144.7 million, followed by ARK 21Shares, which had $84.3 million in outflows. While most ETFs bled, BlackRock iShares Bitcoin Trust posted a rare positive flow of $40.8 million.
Some market analysts believe that the outflows reflect temporary fear-based reactions rather than a long-term reassessment of Bitcoin's value. They argue that Bitcoin, with its decentralized nature, could regain ground once geopolitical uncertainty eases.
Others, however, point to Bitcoin's recent volatility as evidence that it may not yet be as stable as traditional assets during global crises, challenging its reputation as a “safe-haven” asset.
Jimmy Aki
Drawing from his background in economics, Jimmy has monitored blockchain development for years, firmly believing in its power to democratise finance. Beyond offering commentary on the latest crypto developments, he also spends his time analysing open-source codes of promising projects on GitHub. Jimmy holds Bitcoin and Ethereum.
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