Event: On June 13, 2025, Israel launched a large-scale airstrike targeting Iranian nuclear and military facilities, resulting in a sharp geopolitical escalation in the Middle East. Iran responded by launching drones and declared a state of emergency in the region.
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🔍 Direct impact on cryptocurrencies:
1. Sharp price collapse:
- Bitcoin fell by 7% over 3 days, surpassing the $103,000 mark, while Ethereum dropped by more than 9% to $2,516.
- Other coins like Solana and Dogecoin lost 10.35% and 4% respectively.
2. Liquidation of long positions worth $1 billion:
- Long positions worth over $1.04 billion were liquidated within 24 hours due to investors reducing leverage and converting funds to cash.
3. The "Greed" index fell to "Fear":
- The "Fear and Greed" index for cryptocurrencies dropped from 71 (Greed) to 61 (Fear), reflecting a sharp deterioration in market sentiment.
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📊 Main reasons behind the decline:
- Shift to safe havens:
Investors turned to traditional assets like gold (jumped to $3,444), the US dollar (rose 0.85%), and government bonds, which reduced demand for high-risk digital assets.
- Geopolitical volatility:
Cryptocurrencies have shown high sensitivity to direct military conflicts, contrary to their narratives as a "global hedge" against crises. In moments of panic, immediate liquidity is preferred over long-term investment.
- Their correlation with stock markets:
Futures contracts for indices like Dow Jones and Nasdaq dropped by more than 1.5%, intensifying selling pressure on risk-related cryptocurrencies.
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⚠️ Future outlook:
- Continued short-term volatility:
If strikes escalate or threaten the Strait of Hormuz (through which 20% of the world's oil passes), cryptocurrencies may experience further declines.
- Potential support factors:
- Any de-escalation of the conflict may prompt buying at lower prices (Buy the Dip).
- The Federal Reserve meeting next week (expected interest rate cuts) could support global liquidity.
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💎 Summary:
The Israeli-Iranian attack revealed the fragility of cryptocurrencies as "safe" assets during sudden military crises. Nevertheless, market reactions are temporary and depend on:
- Escalation/De-escalation of the conflict.
- Central bank policies next week.
> 📌 Advice for investors:
> - Avoid leverage currently.
> - Monitor the dollar index and oil prices (jumped 9%) as early warning indicators.
