Bitcoin and other cryptocurrencies rebounded sharply in early Asia trading on Sunday after Iran confirmed that the country’s supreme leader had been killed during a military campaign by the US and Israel.
The original cryptocurrency rose as much as 2.21% to $68,196 following the news. It was trading at around $67,700 at 11 a.m. in Singapore, after dropping as much as 3.8% the previous day. Ether, the second-largest token, gained as much as 4.58% to trade back above $2,000.
Crypto markets, which trade 24/7, were rattled in the hours after the bombing began. Iran launched counterstrikes 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 Markus Thielen, head of research at 10x Research, adding that traders were positioning themselves for the upcoming Federal Reserve meeting.
Read More: Khamenei Killed as US and Israel Strike Iran in Widening War
Cryptocurrencies had recovered roughly $32 billion in market value by Sunday morning, after shedding about $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 Hayden Hughes, managing partner at Tokenize Capital. “The real price discovery happens Monday when US equity markets and Bitcoin ETFs 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 selloff in crypto markets, beginning with the liquidation of some $19 billion in leveraged positions in October. Bitcoin has fallen around 50% from its all-time peak of over $126,000 earlier that month, unable to latch on to rallies in gold and other safe-haven assets.
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