Crypto Market Tumbles as Bitcoin Dips to $65,500 Amid Middle East Tensions

The cryptocurrency market experienced a sharp decline today, with Bitcoin (BTC) dropping 2% to test support at $65,500. The selloff intensified across altcoins, with Ethereum, BNB, SOL, and XRP recording losses between 3-6% following Israel’s military action against Iran. This latest geopolitical development has triggered uncertainty across crypto and other risk assets.

Israel Strikes Iran, Crypto Markets React

Early Saturday morning, Israeli forces conducted “precise strikes” on Iranian military installations, marking an escalation in Middle East tensions. Multiple explosions were reported in Tehran, Iran’s capital city.

While the news sparked an immediate crypto market decline, analysts suggest the downturn may be temporary. A similar pattern emerged earlier this April when Israel’s first strike on Iran caused Bitcoin to fall over 4% in a single day, though prices recovered within four hours.

The altcoin market faced steeper declines, with Ethereum (ETH) sliding 3% to $2,450, extending its weekly losses beyond 7.68%. Solana (SOL) witnessed a notable 6.3% drop, falling below $165, despite being one of the strongest performers against Bitcoin over the past month with 11% gains.

Market analyst Benjamin Cowen highlighted that the ALT/BTC pair has reached a new cycle low, suggesting potential further weakness in altcoin performance in the coming months.

Tether Investigation Adds to Market Pressure

Adding to market concerns, reports emerged about a U.S. Department of Justice investigation into Tether. The USDT issuer strongly denied these allegations, dismissing the Wall Street Journal’s reporting as irresponsible.

The news nevertheless impacted markets, with USDT briefly losing its dollar peg, trading at $0.9983. As the largest stablecoin with a $120 billion market cap, Tether’s stability remains crucial for crypto markets.

American University law professor Hilary Allen emphasized Tether’s systemic importance, stating a potential collapse would be “disastrous for the crypto economy.”

However, Arca’s Chief Investment Officer Jeff Dorman offered a more optimistic view, suggesting the market has developed resistance to regulatory headlines, predicting minimal long-term impact on crypto prices.

Disclaimer: This content includes market analysis and should not be taken as financial advice. Always conduct thorough research before making investment decisions in cryptocurrencies.