$BTC The conflict between Iran and Israel has had a notable impact on the cryptocurrency market, particularly on Bitcoin and other major digital assets. Here is a breakdown of how and why:

💣 1. Risk aversion sentiment affects cryptocurrencies

Cryptocurrencies are considered risk assets, meaning they tend to fall when investors become risk-averse.

As tensions between Iran and Israel rise, global markets shift to a safe haven mode (favoring gold, USD, treasuries).

Result: Bitcoin and altcoins were sold off as traders sought safer assets.

📉 2. Bitcoin drop due to war fears

Bitcoin fell from recent highs above $108,000 to below $104,000 amid growing fears of a broader conflict in the Middle East.

Historically, geopolitical instability causes volatility in cryptocurrency prices, but often leads to short-term declines due to a lack of liquidity.

💱 3. Flight to traditional safe havens

Assets like gold and oil surged, diverting attention and capital away from cryptocurrencies.

Gold's gains reflect investors' preference for time-tested hedges over relatively newer assets like Bitcoin during war uncertainty.

📊 4. Reduction in trading volume and volatility

Cryptocurrency trading activity slowed significantly as traders adopted a "wait and see" approach.

Fewer speculative trades = lower volatility, until a significant movement in the conflict triggers reactions.

🔄 5. Long-term outlook: the potential hedge narrative remains alive

While short-term sell-offs are common, many cryptocurrency analysts argue that Bitcoin could benefit in the long term as:

A hedge against inflation

A borderless asset immune to sanctions and capital controls

the conflict