💥 The conflict in Israel, especially following the recent airstrikes against Iran and the response with drones, has generated volatility in the cryptocurrency market. In the short term, the fear of regional escalation has led to massive sell-offs, with liquidations of over $335 million in leveraged contracts within an hour, according to recent reports. Bitcoin and other altcoins have experienced significant declines, ranging from 6-10% in some cases, reflecting a risk aversion similar to that seen in past conflicts like Russia-Ukraine.
However, the long-term impact appears limited. Historically, cryptocurrencies like Bitcoin have behaved as safe-haven assets in times of geopolitical uncertainty, although their correlation with traditional markets (such as the S&P 500) can amplify initial declines. Some investors view cryptocurrencies as a hedge against inflation or financial restrictions, which could boost their demand if the conflict prolongs. Additionally, the adoption of cryptocurrencies for humanitarian donations, such as the initiatives of Crypto Aid Israel, highlights their utility in crises. 👋
Factors such as rising oil prices and monetary policies (e.g., rate hikes by the Fed) could influence cryptocurrencies more than the conflict itself, depending on its duration. The narrative suggests that, after an initial recovery, the market could stabilize and refocus on internal events like Bitcoin ETFs, unless there is a greater escalation. The situation remains uncertain and depends on how tensions evolve. 🙏