On April 13th, the cryptocurrency market witnessed a significant decline, with Bitcoin and other digital currencies falling by nearly 10%.
This decline was caused by rising geopolitical tensions in the Middle East, particularly Iran's attacks on Israel.
Iran attack spurs virtual currency market decline
The cryptocurrency market experienced a significant price crash, with several altcoins dropping by double digits following Iran's actions. For example, Bitcoin saw a rapid drop of $6,000 within minutes of the attack, and the flagship digital asset fell from around $68,000 to $60,800 before recovering to $64,400 at the time of reporting.
Similarly, Ethereum fell from around $3,200 to $2,800 before recovering to $3,000. Other assets such as BNB, Solana, and Dogecoin also fell by 5%, 8%, and 10%, respectively, in the past 24 hours.
These developments resulted in heavy losses for traders. Coinglass data revealed that around $962.4 million was lost, with bullish position holders mainly responsible for his $771.76 million loss. In contrast, short traders suffered losses of $199.63 million due to the market downturn.
Additionally, the DeFi sector saw more than $120 million in liquidations, marking the highest point in liquidations this year, according to Parsec data.
Analysts at QCP Capital believe the broad decline is due to Bitcoin's role as a proxy macro hedge over the weekend, leaving it exposed to the full impact of an immediate risk-off reaction. The company said the situation presents a buying opportunity for traders, citing historic profitability in such scenarios during major geopolitical conflicts.
Read more: Bitcoin Price Prediction 2024/2025/2030
Meanwhile, Julio Moreno, head of research at CryptoQuant, said: highlighted A sell-off that resets a trader's unrealized gains to zero typically signals the bottom of a bull market.
“Following today’s decline, traders’ unrealized gains (in purple) are at their lowest since early February (10%). Additionally, the price is approaching traders’ realized price of $58,000.” Moreno added.
Still, tensions in the Middle East remain high, with Iran warning of further attacks if Israel retaliates against the drone strikes. Notably, the heavily sanctioned country believes it has resolved the issue, but has warned of harsher responses if Israel makes new “mistakes.”
“Iran's military action was in response to the Zionist regime's attack on our diplomatic facilities in Damascus. This issue can be considered closed. However, if the Israeli regime makes another mistake, Iran's The response will be quite severe. This is a conflict between Iran and the rogue Israeli regime, and the United States should stay out of it!” wrote the Permanent Mission of the Islamic Republic of Iran to the United Nations.
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