(Bloomberg) — Smaller, less liquid tokens such as Solana and Cardano led a decline in cryptocurrencies as financial markets shifted toward safety after Israeli airstrikes on Iranian nuclear targets.
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Bitcoin, which accounts for more than 60% of the digital asset world’s market value, was little changed at around $105,600 after earlier dropping as much as 3%. Solana and Cardano were off by roughly 4%, after slumping as much as 8% and 6.7%, respectively.
Total liquidation of crypto bets over the last 12 hours was $106.5 million on Friday in New York, with $44 million and $63 million in long and short positions closed respectively, according to data compiled by Coinglass.
Israel launched strikes across Iran early Friday, targeting nuclear facilities and killing top military commanders, in a major escalation against its chief adversary that risks sparking a broad war in the Middle East.
“Crypto is reacting negatively to news of Israel strikes in Iran, in line with major risk assets,” said Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for crypto derivatives. “We expect to see technical support around $101,000, but geopolitical news will drive price action from here in the short-term.”
Stocks fell while investors rushed to the safety of havens such as Treasuries in the immediate aftermath of the strikes. Crude oil jumped more than 9% while gold also rose. Bitcoin’s initial drop raised more questions on the digital currency’s claim as a safe haven against inflation and geopolitical turmoils.
Bitcoin’s decline shows that while it has “occasionally traded as a macro hedge, in moments of acute risk like this one, particularly involving kinetic military conflict, liquidity is prioritized over narrative,” said Sean McNulty, derivatives trading lead of APAC at digital-asset prime brokerage FalconX Ltd. “Traders raise cash, rotate into dollars, and reduce leveraged or volatile exposure.”
Tony Sycamore, market analyst at IG, said in a note that “a further deterioration in risk sentiment” is likely ahead of the weekend.
–With assistance from Sidhartha Shukla and David Pan.
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