Bitcoin Declines 4% Following Israel’s Assault on Iran, Ethereum Decreases by 9.6%

In the morning trading on Friday, Bitcoin, the largest cryptocurrency globally, fell by more than 4% to $104,000. This drop occurred as the cryptocurrency markets experienced a significant downturn late last night due to reports of Israeli airstrikes on Iran, which heightened Middle Eastern tensions and prompted a widespread risk-off sentiment. Ethereum dropped sharply as well, by 9.6%.

Solana, XRP, and BNB also experienced declines of 9.62%, 5.42%, and 2.65%, respectively

Bitcoin recently surpassed $111,000, breaking its previous record.

As stated by CoinSwitch Markets Desk, “Cryptocurrency markets experienced a sharp downturn late last night after news of Israeli airstrikes on Iran heightened Middle Eastern tensions and sparked widespread risk aversion. BTC decreased by 4%, reaching approximately $104,000, whereas ETH fell by 9.6% to $2,493. The overall crypto market cap declined by more than 5% and now amounts to $3.35 trillion.

The geopolitical uncertainty also sent crude oil prices surging by over 5%, raising fresh concerns about inflation. Elevated oil prices may compel the US Federal Reserve to adopt a more cautious stance on rate cuts, further dampening investor appetite for risk assets, including crypto, it added.

In addition to cryptocurrencies, the equity and currency markets also experienced a decline on Friday.

President Donald Trump’s media company recently revealed plans to collect $2.5 billion for bitcoin purchases, aligning with a rising number of “bitcoin treasury companies” as the leading cryptocurrency reaches unprecedented highs.

The reasons for companies purchasing bitcoin vary: Some retain it as a hedge against inflation or to demonstrate their backing for the cryptocurrency sector, while others have adopted the strategy of using debt and stock sales to acquire bitcoin as their primary. In contrast,ness approach.

Why is Bitcoin So Volatile?

Due to various influences, Bitcoin’s price has experienced significant fluctuations since its inception. Firstly, the cryptocurrency market is still comparatively small and less liquid than traditional financial markets, meaning that large trades can influence price movements. Secondly, Bitcoin’s valuation is influenced by public sentiment and speculation, resulting in short-term price fluctuations. As stated on binance.com, uncertainty is generated by media coverage, influential opinions, and regulatory developments. This uncertainty impacts the dynamics of demand and supply and contributes to price fluctuations.

Another important aspect is the limited supply of Bitcoin. Because there will only ever be 21 million bitcoins created, its scarcity can cause prices to fluctuate dramatically with changes in demand. It further noted that “whales,” or major Bitcoin holders, worsen this situation, as their substantial transactions can significantly influence the market.