In the early morning of April 14, local time, Iran launched a large-scale attack on mainland Israel. The situation in the Middle East suddenly escalated. Cryptocurrency dived in response. Bitcoin plummeted by more than 6,000 US dollars, plummeted 8% during the day, and then rebounded slightly.

The market once described Bitcoin as “digital gold,” but judging from recent trends, it seems that the safe-haven nature of this asset no longer exists.

Bitcoin plummeted 8% within 24 hours, the biggest drop since March 2023. As of press time, the decline had narrowed, and the transaction price was about $63,900. Bitcoin's sharp drop dragged down cryptocurrencies, with Ethereum falling more than 11%, Dogecoin falling more than 22%, and Sol falling more than 23%.

According to CoinGlass data, in the past 24 hours, 244,500 people have liquidated their positions in the virtual currency market, and the total amount of liquidated positions reached US$930 million.

“Whether the cryptocurrency sell-off continues may depend on a further escalation of the situation,” said Zaheer Ebtikar, founder of crypto fund Split Capital. “People will be watching the market on Monday.”

The escalation of the geographical situation in the Middle East affected the performance of traditional financial markets and stimulated the rise in safe-haven assets such as the US dollar, crude oil, and US bonds. On Friday (April 12), the US dollar index surged 0.7% to 106.0228, once again setting a new high since November last year. This week, the US dollar index rose by a cumulative total of 1.65%, the biggest weekly gain in more than a year and a half.

According to Coinglass's data, about $1.5 billion of leveraged transactions for bullish cryptocurrencies were liquidated on Friday and Saturday, one of the worst two-day liquidations in half a year, leading to a sharp drop in digital asset prices. The fervent interest of investors in the coin industry once drove the price of Bitcoin to an all-time high of 7,3798 US dollars, but many well-reaped buyers seemed to be able to make a profit as soon as possible. Currently, Bitcoin has dropped more than 10,000 US dollars from this historical high.

Ebtikar said that over the past three days, the cryptocurrency market has experienced a sharp decline, causing many leveraged investors to close their positions, which further intensified the selling pressure and price drop in the market.

The current net inflow of Bitcoin spot ETF funds has become an important factor affecting the trend of Bitcoin and the virtual market as a whole. According to Farside Investors data, since the launch of the current Bitcoin ETF in January, Grayscale GBTC's net capital flow has exceeded $16.2 billion.

Since April, Grayscale GBTC's daily outflows have fluctuated between $75 million and $300 million. GBTC recorded a sharp outflow of $767 million this week, leading to an overall negative inflow of spot Bitcoin ETFs.

According to media reports, a major event in the virtual currency market — Bitcoin's “halving” — is expected to occur around April 20, attracting investors' attention because it will directly relate to the supply and demand relationship of Bitcoin.

The Bitcoin “halving” event means that rewards received after producing a new block are halved, which occurs approximately every four years. The exact time depends on the Bitcoin network's block generation rate, which will reduce the supply of Bitcoin. The halving of block rewards means that it takes longer for all bitcoins to enter the market circulation.

Historically, “halving” usually drives up prices, but given that Bitcoin has recently reached a record high, the market has doubts about whether this “halving” event can drive Bitcoin's rise. Some analysts pointed out that the difference between the previous Bitcoin market is that the previous cryptocurrency bull market was all after “halving,” but this time it was before halving, so this round of market may not follow the same path as the previous few times.

Editor/Somer