On October 13, local time, Israel launched a preemptive attack on Iranian nuclear facilities. The operation, which included airstrikes on dozens of Iranian sites, plunged the Middle East into turmoil, causing a ripple effect across financial markets. The situation precipitated a downturn in major markets, notably the cryptocurrency sector.
Bitcoin witnessed a dramatic fall, dropping below $103,000 as the news of Israel's airstrikes on Iran emerged. The cryptocurrency market as a whole felt the impact of the escalating geopolitical tensions, experiencing a meltdown as a result. Benzinga reported that Bitcoin exhibited a decline, plunging more than 7% over three days and settling at approximately $103,200 on the same day.
The broader financial markets also reacted to these developments. Asian stock markets opened with declines, continuing the downward trend seen in stock futures overnight Thursday. Futures on major indices, including the Dow Jones Industrial Average and the S&P 500, showed losses. Dow Jones Futures tumbled 570 points, a decline of 1.33%, while S&P 500 index futures fell by 1.8%, and bottomed by 1.43% shortly after the news of the bombings was announced.
Volatility in the financial markets extended to the cryptocurrency domain, where over $1 billion was liquidated in 24 hours, with $1.04 billion coming from long positions. The derivative markets were impacted negatively as well, with Bitcoin's Open Interest dropping by 5.69%. Meanwhile, Ethereum's value decreased more than Bitcoin's, with a drop of over 9% in 24 hours, hitting below $2,550. Dogecoin and Solana were also notably affected; Dogecoin fell by over 4%, while Solana experienced a sharper descent of 10.35%, amid the ongoing geopolitical tensions.
The geopolitical landscape remained tense, as Israel's Defense Minister, Israel Katz, indicated that retaliatory strikes on Israel were expected. The Cryptocurrency Fear & Greed Index showed a decrease in market sentiment, with the "Greed" sentiment plunging from 71 to 61 over 24 hours. "The change reflects increasing global economic uncertainty amid the turmoil in the Middle East,".
Maeil Business reported that Israel confirmed the completion of the first phase of its operation, named Nation of Lions. The operation was set to continue over the following days, further influencing market behavior and exacerbating the instability seen in cryptocurrencies. Reports from Reuters and other foreign media confirmed loud explosions northeast of Tehran, indicating military activity in the region.
Ripple (XRP) also saw a downturn, dropping 6.60% to $2.13, while funds locked in Ethereum's outstanding contracts fell by more than 13%, affecting digital assets. Notably, Nasdaq 100 Futures have likewise suffered from the geopolitical developments, losing 1.44%, according to Benzinga. As the Middle East situation evolved, markets worldwide were bracing for continued volatility. Analysts and investors closely monitored the unfolding events as these geopolitical tensions continued to drive market reactions globally, underscoring the interconnectedness of global financial systems and the sensitivity of digital currency markets to geopolitical events.
