New Middle East war is also putting a significant strain on the crypto market

• The crypto market has been under pressure since the Israeli-American airstrikes on Iran. The military escalation of the conflict has triggered a flight from risk assets.
• According to CoinDesk, the BTC price temporarily fell to $63,000. Bitcoin is the first to be affected by such geopolitical shocks because, unlike most assets, it can be liquidated 24/7.

The Bitcoin price decline by over six percent in just a few hours is the strongest sign of the deteriorating market mood.

Gate.com describes that the total crypto market capitalization has shrunk by tens of billions of dollars.

Investors seek liquidity during periods of geopolitical stress and avoid highly volatile markets.

Altcoins

Altcoins reacted in the same way as Bitcoin, although less strongly. According to Gate.com, Ethereum and other major tokens lost more than two percent.

The market is showing a clear pattern: capital is flowing out of smaller, less liquid projects while investors focus on the largest assets. This shift is typical of periods of increased uncertainty.

A key driver of the downward trend is the derivatives market. Gate.com describes that hundreds of millions of dollars in leveraged positions were liquidated in a short period of time.

The pattern is well known: If prices fall below critical levels, long positions are closed, which creates additional selling pressure.

Since the crypto market trades around the clock and liquidity is lower compared to traditional markets, market movements intensify particularly quickly.

Consequences for the industry

The new Middle East war can expand. There are several possible consequences for the crypto industry:

• Institutional inflows into ETFs are stagnating as large investors move out of risky assets in times of crisis.
• Stablecoins are gaining in importance because they are a target for withdrawal during highly volatile phases.
• Mining locations in the affected region are at risk, which leads to further price distortions.
• Capital flows can be regulated restrictively because states rely more heavily on financial controls during crises.

outlook

The crypto industry is in a phase of increased uncertainty. While markets have always recovered from geopolitical shocks, the current situation may drag on.

The decisive factor will be whether the military part of the conflict ends quickly or continues to escalate.