Recent ceasefire brings recovery after Bitcoin fell to $102K during 12-day war, total crypto market value hit rock bottom
Cryptocurrencies like Bitcoin saw sharp declines during the 12-day Israel-Iran conflict, but prices rebounded after the announcement of a ceasefire.
Cryptocurrencies are risky investment instruments, and they suffer declines with heightened geopolitical tensions.
Israel’s airstrikes, which began at midnight on June 13, led Bitcoin to decline from $107,000 to $102,000, while the vast majority of altcoins saw declines of over 10%.
The negative outlook persisted with continuing mutual attacks, limiting the gains in the crypto market.
However, the crypto market hit rock bottom on June 22 when the US launched airstrikes on Iranian nuclear facilities, with the losses in many altcoins exceeding 30%.
The total value of the cryptocurrency market fell from an estimated $3.4 trillion to $3 trillion during this period, reaching its lowest ever.
Some recovery was seen in the market with the announcement of a ceasefire, as Bitcoin rose above $106,000 again, the level prior to the 12-day conflict.
Altcoins gained over 20%, and many rebounded to their pre-conflict level.
Mustafa Batuhan Tufaner, an associate professor of economics at Istanbul Beykent University, told Anadolu that cryptocurrencies saw a highly volatile period during the intense conflict, but Bitcoin stayed more resilient than altcoins, similar to the currency’s prior performance in past geopolitical crises.
“Investors still opt primarily for gold but also for the US dollar and Treasury bonds in the event of any risk, which shows that cryptocurrencies have yet to fully establish themselves,” he said. “At the same time, altcoins like Ethereum saw more severe fluctuations and losses, which signals that the risky segment of the crypto market is more fragile.”
Tufaner stated that geopolitical developments will determine the direction of the crypto markets in the following period.
“The volatility in cryptocurrencies will rise if the Israel-Iran conflict escalates into regional conflicts, but a decline in risks could trigger a trend of risk asset purchase in the markets,” he said. “The Fed’s interest rate decision will also influence the crypto market, as a low-interest-rate environment can … give rise to demand for cryptocurrencies.”
“Exchange-traded fund (ETF) approvals for cryptocurrencies in the US and the involvement of institutional investors in the crypto market will help stabilize cryptocurrencies, influencing the crypto market’s direction,” he added.
