Iran-Israel Airstrike Roils Virtual Asset Market

Amidst tensions between Iran and Israel, the cryptocurrency market witnessed a significant drop on March 14th. Triggered by news of an Iranian airstrike, Bitcoin plunged by approximately 10%, falling below the $60,000 range. Altcoins also experienced substantial losses, with some dropping over 20%. The decline has raised concerns about Bitcoin's safe haven status, which had been previously compared to gold.

Virtual Asset Market Roiled by News of Iran-Israel Airstrike

[New York City, United States] - The virtual asset market experienced a significant downturn following news of an airstrike launched by Iran on Israel on the night of March 13, local time. The attack, involving dozens of armed drones and missiles, sent shockwaves through the financial world.

Bitcoin, the largest cryptocurrency by market capitalization, plummeted by approximately 10% in the early hours of March 14 (Korean Standard Time), falling to the $60,000 range. Altcoins, alternative cryptocurrencies to Bitcoin, also experienced sharp declines, with some losing over 20% of their value.

Bitcoin's Safe Haven Status Challenged

Bitcoin has often been touted as "digital gold," implying that it can serve as a safe haven asset during periods of market volatility. However, the recent price plunge has raised questions about Bitcoin's reliability in this regard.

According to CoinMarketCap data on March 14, Bitcoin traded at $63,924, down 4.76% from the previous day. The cryptocurrency briefly dropped to $60,660 after news of the Iran-Israel airstrike broke at 4 a.m. (Korean Standard Time).

This represents the first time in around a month that Bitcoin has fallen below the $60,000 level, after reaching this threshold on February 20.

Altcoins Suffer Steep Losses

Altcoins, which often exhibit higher volatility than Bitcoin, also experienced significant losses. Ripple (XRP) fell by 12.44%, Solana (SOL) by 9.59%, Sui (SUI) by 14.39%, and Aptos (APT) by 10.30%.

Kimchi Premium Soars

The "Kimchi Premium," the difference between Bitcoin prices in South Korea and overseas, surged to nearly 20% in the wake of the early morning market plunge. Even at present, the Kimchi Premium remains above 10%.

This is the first time in three years that the Kimchi Premium has reached such high levels, last seen in May 2021. At that time, the premium soared due to excessive investor sentiment as Bitcoin reached its all-time high.

Liquidations and Volatility

Coinglass, a virtual asset analysis firm, estimates that approximately $954 million in virtual asset futures positions were liquidated within a 24-hour period. Long positions, which bet on rising prices, accounted for $772 million of these liquidations.

The sharp drop in Bitcoin prices has resulted in the liquidation of 14.23% of outstanding Bitcoin futures transaction agreements.

External Factors Influence Market

The virtual asset market has been grappling with several adverse factors in recent times. The release of the U.S. consumer price index (CPI) for March on March 10 exceeded market forecasts, dampening investor sentiment amid concerns over rising inflation and potential interest rate hikes.

The ongoing war in Ukraine and geopolitical tensions have further fueled market instability. The Chicago Mercantile Exchange (CME) Group FedWatch tool currently estimates a 72% probability of a rate hike in June.

Cryptocurrency Trading Firm Weighs In

QCP Capital, a Singapore-based cryptocurrency trading firm, stated in a report that "the Iranian threat of retaliation against Israel last night (local time) triggered the sale of risky assets, including cryptocurrency."

Bitcoin's Value as a Safe Asset Questioned

The recent decline in Bitcoin prices has raised questions about its value as a safe asset, particularly during periods of conflict. Unlike traditional safe havens like gold, Bitcoin has exhibited a sharp decline in response to the war situation.

However, it is important to note that during the Russian invasion of Ukraine on February 24, 2022, Bitcoin experienced a similar 9% drop in the early hours following the news. However, the cryptocurrency subsequently recovered and rose in value, suggesting that it may still retain some safe haven characteristics in the long run.