Cryptocurrencies experienced a significant decline on Tuesday night, with bitcoin falling back to around the $60,000 mark after a turbulent start to what is traditionally one of its strongest months. Bitcoin saw a nearly 4% decline, reaching $60,972.62 according to Coin Metrics, and at approximately 4:45 p.m. Eastern time, it dropped as low as $60,175. Ether also faced a downturn, trading at $2,449.83, down more than 5%.
Stocks associated with virtual currencies followed suit, tumbling in extended trading. The crypto exchange Coinbase fell by about 1%, while MicroStrategy, a company heavily invested in bitcoin, lost 2% after closing down by 7.4% and 3.5%, respectively, in the previous trading session.
As the new trading month and quarter commenced, rising tensions in the Middle East dampened investors’ risk appetite. On Tuesday, Iran launched a ballistic missile attack on Israel in retaliation for the recent killing of Hezbollah leader Hassan Nasrallah and an Iranian commander in Lebanon. This surge in unrest has caused oil prices to rise and strengthened the dollar, exerting additional pressure on bitcoin and other speculative investments.
Chris Kline, the chief operating officer and co-founder of Bitcoin IRA, noted that the heightened Middle Eastern turmoil has significantly impacted market sentiment. Compared to September’s unexpectedly strong performance for bitcoin, October appears poised for volatility, influenced by the aftereffects of last spring’s halving event and the upcoming contentious U.S. elections. Concurrently, global economic dynamics are shaped by various central banks’ actions to reduce interest rates and increase money supplies.
Investors are also closely monitoring a strike by the International Longshoremen’s Association on the East and Gulf Coasts, which could have implications for the U.S. economy, depending on its duration.
Historically, October and November are among the most robust months for bitcoin, with the cryptocurrency finishing higher in all but two years since 2013 and averaging nearly a 23% return. This trend has earned October the nickname “Uptober” among crypto investors. Despite struggling to surpass the $70,000 threshold, bitcoin has found strong support at the $55,000 mark. While some investors are skeptical that October will see a resurgence for bitcoin, many remain optimistic about the cryptocurrency testing new highs in the coming quarter.
