Bitcoin has fallen sharply, posting its biggest drop in nearly a month, as riskier assets have been dragged down by rising tensions in the Middle East, undermining the notion that cryptocurrencies are a safe haven.
Bitcoin, the largest cryptocurrency, fell 5.7% to $60,168, its biggest daily drop since September 6, before paring some of those losses in the past few hours. Altcoins also saw bigger declines, with Ethereum down more than 6%, Dogecoin down 8% and Avalanche down more than 7%.
The drop in cryptocurrency prices comes as stocks have fallen, with investors moving towards safer assets. Traditional safe-haven assets such as bonds, oil, gold and the US dollar have surged after the escalation of the conflict in the region following Iran’s firing of missiles at Israel, coinciding with the advance of Israeli forces into Lebanon.
Previously, cryptocurrency advocates, such as BlackRock's head of digital assets Robbie Michnick, have promoted the idea that Bitcoin has properties similar to uncorrelated assets like gold.
“We see Bitcoin as an emerging global alternative to cash,” Michnick told Bloomberg last week. “It’s a scarce, global, decentralized asset that’s not tied to any country or sovereign. It’s not subject to country-specific or counterparty risk.”
temporary setback
Bitcoin bulls who had been anticipating a seasonal rally in October faced an early reality check as rising tensions in the Middle East prompted caution in global markets.
Cryptocurrencies fell after Iran fired about 200 ballistic missiles at Israel in a sharp escalation. Bitcoin pared some losses on Wednesday, trading at around $61,940 at the time of the day’s trading.
