Bitcoin Crumbles to $60K, Giving Up Most Post-Fed Rate Cut Gains

The S&P 500 and Nasdaq experienced declines following reports that Iran was preparing for a potential missile attack on Israel. Bitcoin fell 3% over the past 24 hours, while major altcoins like SOL, AVAX, DOT, and NEAR saw losses between 5% and 10%.

According to analysts at Swissblock, “war news” typically does not have a lasting negative impact on asset prices.

During Tuesday’s U.S. session, cryptocurrencies dropped sharply as reports of rising tensions in the Middle East caused investors to retreat from risk assets. Bitcoin (BTC), the largest cryptocurrency by market capitalization, briefly rose to around $64,000 during European trading before plummeting to $62,500 after Axios reported that the White House had indications of an imminent missile attack from Iran on Israel. The price dipped further to $61,000 when the Israel Defense Forces (IDF) confirmed that Iran had launched missiles.

By late afternoon, Bitcoin’s value had settled just above $60,000, erasing nearly all the gains it had made following the U.S. Federal Reserve’s significant rally after a 50 basis point interest rate cut in mid-September.

The broader digital asset benchmark, the CoinDesk 20 Index, fell nearly 5% during this time, with Ethereum (ETH) experiencing a slightly better outcome, down 3.8% and trading just above $2,500. Other major altcoins suffered larger setbacks, including Solana (SOL), Polkadot (DOT), Avalanche (AVAX), Uniswap (UNI), Render (RNDR), Polygon (POL), and Hedera (HBAR), which all saw declines of 5% to 10%.

U.S. stock indexes opened lower as well, with the S&P 500 and the tech-heavy Nasdaq falling 1% and 1.7%, respectively. In contrast, gold rose 1% to $2,690 per ounce, approaching its record high of just over $2,700 reached the previous week, while WTI crude oil surged 3% to exceed $70 per barrel.

The contrasting movements of gold and Bitcoin underscored Bitcoin’s strong correlation with risk-on assets like stocks, while gold maintained its status as a safe-haven investment. K33 Research noted in a Tuesday report that the 30-day rolling correlation between Bitcoin and the S&P 500 is nearing yearly highs at 0.62.

Bitcoin’s decline on Tuesday mirrored the price movements seen at the onset of the current Middle East unrest nearly a year ago, as well as similar reactions in April and July when crypto assets dropped sharply in response to headlines from the region.

In a Telegram market update, analysts at Swissblock reaffirmed their bullish stance on digital assets, stating that “war news,” such as the events affecting markets today, typically does not have a lasting negative effect on asset prices.