3.7% Drop for Bitcoin on Iran Conflict Escalation

Quick overview

The price of Bitcoin plunged to $65,834 (BTC/USD) on Thursday following an announcement from U.S. President Donald Trump that he would be attacking Tehran.

Trump promised to hit Iran hard Wednesday night, and cryptocurrency prices fell deeply as a result, with Bitcoin (BTC) losing 3.7% in a few hours. Gains from earlier in the week have been erased by the news, and unless there is a change in the Middle East conflict, we expect Bitcoin to fall further.

Sharp drops plagued the crypto market Thursday morning, with Ethereum (ETH) losing 5% and BNB (BNB) falling 6.8%. Most crypto tokens are now in the red for the week and are still falling in Thursday’s early hours.

Bitcoin Unlikely to Recover Quickly

The current downtrend is swift and strong, eliminating much of Bitcoin’s recent progress. In fact, the BTC rate is now down to its lowest point for the year so far and trade volume has fallen 11%.

On the news of escalating war in Iran, oil prices are climbing quickly. Just a few weeks ago, $100 a barrel was seen as high, but now prices are between $106 and $114 a barrel. While oil prices rise, crypto values sink, because consumers have less money to spend on assets like Bitcoin when they are paying more out of pocket for gas.

Traders should consider the risk of escalation now, and Trump’s announcement is likely to spur increased military action from both sides. That could put even more gas and oil supplies at risk and extend fighting further. Bitcoin’s precarious position near $70K this week simply could not hold up to that intense global pressure. The coin has been volatile and fragile for months, facing a severe souring of consumer sentiment.  

The downtrend is a strong test of Bitcoin’s resilience in the face of economic pressure. The coin is at a make-or-break point now as the war intensifies to a white hot heat. If Bitcoin can keep from falling too far and perform better than other leading crypto tokens, it may turn market sentiment around and climb back up quickly after the fighting dies down.  

There is a strong chance that Bitcoin will crumble under the pressure, though and will slip close to $50K, which we mentioned recently was a possible bottom for the coin in the short-term. Throughout the fighting, however, Bitcoin has proven more resilient than some assets. For March, Bitcoin finished the month close to 2% higher than it started, but gold dropped by 11%. The Nasdaq Composite fell about 5%, and the Dow lost about 3%. 

ABOUT THE AUTHOR See More

Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

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