(Bloomberg) — Cryptocurrency traders are on the lookout for a bottom as a recovery in prices on Sunday was confined to a narrow range, with investor confidence shaken following US and Israeli strikes on Iran.
Bitcoin rose as much as 2.2% to $68,196 after Iran confirmed the death of the country’s supreme leader Ayatollah Ali Khamenei, before falling back to about $67,000 at 7:30 am in London. Bitcoin put options worth $1.87 billion were concentrated at the $60,000 level on Deribit, signaling persistent demand for downside protection.
Digital assets reacted quickly to news of the joint US-Israel military campaign on Saturday. Bitcoin fell as much as 3.8% to nearly $63,000 on Saturday, and the total crypto market value dropped by $128 billion, according to data from CoinGecko.
“Over $128 billion wiped in minutes, forced liquidations cascaded, and once that selling exhausted itself the reflex bounce was mechanical,” said Hayden Hughes, managing partner at Tokenize Capital.
“The real price discovery happens Monday when US equity markets and Bitcoin ETFs reopen,” he added. “With missiles hitting Dubai, Iranian retaliation across the Gulf, and Strait of Hormuz closure risk, this is not a contained event.”
Bitcoin exchange-traded fund flows will be “the single most important number to watch” when markets reopen, Hughes said, pointing to $1 billion of inflows over three consecutive sessions last week. If that trend reverses, Bitcoin could break below $63,000, he added.
Following the attack, Iran launched counterstrikes on multiple locations — including Israel, Qatar, the United Arab Emirates and Bahrain — and threatened more against US-linked bases in Iraq.
Some observers said Sunday’s mild bounce is a sign that crypto markets are looking past the Iran turmoil and that traders are positioning for an extended recovery in prices.
“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.
Bitcoin call options were concentrated around $75,000, according to Deribit data.
The US attack was to a large extent factored in by traders who “used the weakness as a buy-the-dip or close-their-shorts opportunity,” said Richard Galvin, co-founder of the hedge fund Digital Asset Capital Management.
Bettors also cashed in on Polymarket, where $529 million in contracts were traded on the timing of a US strike on Iran.
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