NEW YORK – Bitcoin and other cryptocurrencies rebounded sharply in early Asia trading on March 1 after Iran confirmed that
the country’s Supreme Leader had been killed
during a military campaign by the US and Israel.
The original cryptocurrency jumped by more than 2 per cent, breaching US$68,000 following the news, before paring some gains. Bitcoin had dropped as much as 3.8 per cent the previous day. Ether, the second-largest token, also jumped and is now back above US$2,000.
Crypto markets, which trade 24/7, were rattled in the hours after the bombing began. Iran launched counter-strikes on multiple locations – including Israel, Qatar, the United Arab Emirates and Bahrain – and threatened more against US linked bases in Iraq.
Yet digital assets started to recover throughout the day, with Bitcoin moving sharply higher after initial reports that Iranian leader Ayatollah Ali Khamenei was dead.
“Traders generally don’t expect the Iran conflict to have major negative economic consequences, and demand for upside Bitcoin calls has clearly picked up in recent days,” said Mr Markus Thielen, head of research at 10x Research, adding that traders were positioning themselves for the upcoming US Federal Reserve meeting.
Cryptocurrencies had recovered roughly US$32 billion (S$40.5 billion) in market value by the morning of March 1, after shedding about US$128 billion the previous day, according to data from CoinGecko.
“Bitcoin is the only large liquid asset trading 24/7, so it absorbed all the selling pressure that would normally spread across equities, bonds and commodities,” said Mr Hayden Hughes, managing partner at Tokenize Capital.
“The real price discovery happens on March 2, when US equity markets and Bitcoin ETFs (exchange-traded funds) reopen. With missiles hitting Dubai, Iranian retaliation across the Gulf, and Strait of Hormuz closure risk, this is not a contained event.”
For Bitcoin, the weekend losses extend a months-long sell-off in crypto markets, beginning with the liquidation of some US$19 billion in leveraged positions in October. Bitcoin has fallen around 50 per cent from its all-time peak of over US$126,000 earlier that month, unable to latch on to rallies in gold and other safe haven assets.
“As always, when critical events take place during the weekend, Bitcoin plays the role of pressure valve,” said Mr Justin d’Anethan, head of research at Arctic Digital, noting that the initial impact on the token was not as drastic as some might have expected.
“With a lot of the leverage already cleared out and exhausted sellers, there’s only so much impact macro events can have,” he added.
Meanwhile, with traditional venues closed, digital asset investors turned to tokenised commodities on decentralised exchange Hyperliquid to position for geopolitical fallout. Prices for contracts tied to oil, gold and silver jumped on the platform.
The reaction also materialised through a sharp increase in selling pressure on Bitcoin derivatives, where within a single hour on the morning of Feb 28, sell volume surged by approximately US$1.8 billion, according to an analysis published by CryptoQuant.
“This type of imbalance reflects clear seller dominance and rising short-term risk aversion,” wrote crypto analyst Mr Sylvain Olive. “Flows are driven more by emotion and risk management than by structural dynamic, requiring a cautious approach.” BLOOMBERG