Iran’s attack against Israel provoked a collapse in quotations on the cryptocurrency market

Iran’s retaliatory attack against Israel provoked a rapid collapse in quotations on the cryptocurrency market. The rates of leading digital currencies fell last week by 6–19%, falling back to local minimums. Market volatility will continue in the coming days as there is no clarity on how Israel and its allies will respond.

The bearish play on the cryptocurrency markets, which cost them 6–19% of their value at the end of the week, began before the weekend. The first massive sales took place on Friday amid reports that Iran could strike Israel in the next one or two days. As a result, quotes bitcoinEther, Ripple, and Tetter hit one-and-a-half-month lows, losing 4–10% of value per day, according to data from CoinMarketCap.

For most of Saturday, cryptocurrencies were recouping the declines of the previous day, but in the evening, when reports of a combined Iranian strike on Israel emerged, panic selling of cryptocurrencies began. By 23:00 Moscow time, exchange rates had fallen by 10–30%. In particular, the cost of bitcoin fell to $60.7 thousand, ether – to $2.85 thousand, minimums since the end of February.

Amid the escalation of the situation in the Middle East, investors flocked to the dollar en masse, selling off shares and cryptocurrency, notes BitRiver financial analyst Vladislav Antonov.

Taking into account the fact that the main stock and commodity exchanges are closed on weekends, sales were carried out mainly of digital assets that are traded seven days a week.

According to Vladislav Antonov, the total sales of one bitcoin on Saturday amounted to $261 million. “Given the low market activity due to the absence of some major players, it was not difficult to push the market,” notes Cryptorg chief analyst Andrey Podolyan.

However, in the absence of further escalation of the situation, common sense overpowered emotions, and on the night of April 14, the repurchase of previously sold positions began.

This had a positive effect on exchange rates. On Sunday at 19:00 Moscow time, the Bitcoin rate was already at $64.6 thousand, which is 6.5% higher than Saturday’s low, but still 7% lower than the close of the end of the previous week. Ether gained more than 8% during the day and returned above the $3 thousand level, but remained 11% below last Sunday’s values. “Judging by the moderately negative reaction in those markets that are open on Sunday, investors are not yet ready to completely close positions,” notes Oleg Novikov, investment director at Astero Falcon.

The situation between Israel and Iran remains extremely difficult; investors continue to closely monitor statements by official representatives of the parties. In particular, Israel has already promised retaliatory actions, as well as the potential involvement of new participants in the conflict.

According to Oleg Kalmanovich, chief analyst at Neomarkets, turbulence in the financial sector will definitely increase, especially among the rearguard of the digital market, the so-called memcoins and lesser-known projects.

Vladislav Antonov does not exclude the possibility that if the conflict escalates, Bitcoin may return to the level of $52 thousand.

In such conditions, the market will not have time for the halving scheduled for the coming week, which is considered a growth factor. This growth, OKX commercial director Lennix Lai believes, will manifest itself in the medium and long term, and not immediately immediately after a reduction in remuneration. “In general, increased volatility in the month before and after the halving was observed in previous cycles,” Mr. Lai notes.

Market participants admit that volatility in the stock and commodity markets may increase at the beginning of the new week. First of all, analysts are interested in the reaction of the oil and precious metals markets, which, in anticipation of Iran’s response, rose strongly last week and reached $2,400 per troy ounce and $92 per barrel. “We are not interested in the first three hours of trading, since this will be a reaction to the events of the weekend. It is important how trading opens at the European session,” notes Vladislav Antonov. In the event of a retaliatory strike from Israel, according to investment strategist at Arikapital Management Company Sergei Suverov, Brent quotes could rise to $95–100 per barrel, and gold prices to $2,450 per troy ounce.

Vitaly Gaidaev