The cryptocurrency market has kicked off April on a bearish note, with the anticipated ‘Uptober’ rally now at risk due to escalating tensions between Israel and Iran. Iran has launched missile attacks against Israel in retaliation for the latter’s strike on Hezbollah forces in Lebanon, marking another episode in the ongoing conflict between the two nations this year.

Crypto Market Faces Headwinds from Israel-Iran Conflict

The market is poised to experience negative impacts from the Israel-Iran conflict, as Iran conducts missile strikes on Israel following the latter’s ground invasion of Southern Lebanon and the assassination of Iranian-backed Hezbollah leader Hassan Nasrallah.

As anticipated, the crypto market is already showing signs of distress in response to these developments. Data from Coinglass reveals over $351 million in liquidations across the market in the past 24 hours. Meanwhile, cryptocurrency prices are declining, with Bitcoin dipping below $63,000 following news of Iran’s impending attack.

Geopolitical conflicts like the Israel-Iran tensions typically have adverse effects on the market, introducing uncertainty and triggering waves of sell-offs. It’s worth noting that this isn’t the first time tensions between the two countries have escalated this year. In April, Iran launched a drone and missile attack on Israel in retaliation for an Israeli airstrike that killed a top Iranian general in Syria.

Bitcoin experienced an 8% drop following that incident, with the broader crypto market suffering similar setbacks. As such, history may repeat itself if Iran follows through with its latest attack. Moreover, reports suggest that Iran’s current offensive could be more severe than the April attack.

According to a recent analysis, Bitcoin was already primed for a correction as its price slipped below $65,000. Therefore, this geopolitical incident has likely acted as a catalyst for the ongoing price adjustment.

Market Sentiment Shifts as FUD Returns

Fear, uncertainty, and doubt (FUD) are set to make a comeback in the crypto market amidst the Israel-Iran tensions. The market was approaching extreme greed territory, with participants increasing their risk appetite following Bitcoin’s surge above $65,000 last week. On-chain analytics platform Santiment recently suggested that the return of FUD to the market could actually be bullish in the long term.

Santiment argued that the crowd’s overwhelmingly bullish sentiment towards Bitcoin indicated a high probability of a market top. The Israel-Iran conflict is expected to trigger a price retracement, potentially leading to panic selling. Once this occurs, the platform predicts that FOMO (fear of missing out) will give way to FUD, setting the stage for the bull market to resume shortly thereafter.