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Cryptocurrencies in free fall: How the Iran-Israel conflict affects Bitcoin and Ethereum

Cryptocurrencies in free fall: How the Iran-Israel conflict affects Bitcoin and Ethereum

For the rest of the cryptocurrencies the situation does not improve with decreases of more than 10% led by Ripple and Dogecoin.

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After an optimal week for cryptocurrencies, Bitcoin It plummeted in the last 24 hours by more than 4.3%, reaching US$64,000. Meanwhile, Etheruem loses more than 7% and is slightly above US$3,000.

For the rest of the cryptocurrencies the situation does not improve with decreases of more than 10% led by Ripple and Dogecoin. This fall was attributed to the collapse of traditional markets, driven by the igeopolitical uncertainty associated with possible tensions between Iran and Israel.

This drop in Bitcoin price caused a chain reaction, negatively affecting other cryptocurrencies on the price charts. These pullbacks led both assets to break their previously established highs, interrupting their uptrend. Cryptocurrencies that operate 24 hours a day are a “rearview mirror” of market sentiment and what is expected to happen on Monday with the opening of all global stock exchanges if the conflict continues to escalate.

How war conflicts impact investors

Among these factors, war conflicts occupy a preeminent position due to its immediate impact on investors’ perception of risk. When a situation like the current military escalation between Israel and Iran arises, it creates an atmosphere of global uncertainty and fear.

Investors, in times of war tension, tend to be more cautious. Their risk aversion grows and, consequently, many choose to stay away from assets considered risky. Bitcoin, despite its growing popularity as a store of value and digital gold, is still viewed by many in the financial market as a high-risk asset. This is due to its historical volatility and relative youth.

The decision of investors to withdraw their capital from assets such as BTC in times of crisis leads to an increase in the supply of the asset in the market, without a corresponding increase in demand, resulting in a fall in its price. This is a direct reflection of the law of supply and demand, a fundamental economic principle that affects all financial markets.

Source: Ambito

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