Bitcoin crashes below $60,200 in liquidity of $523 million

Historically, October was often referred to as “Uptober.” However, this year, October started off on a high note as geopolitical tensions between Israel and Iran escalated.

This conflict has had a significant impact on international markets, with cryptocurrencies bearing the brunt of the fall.

Bitcoin has fallen to $60,200 due to Crypto Liquidations

On October 1, Iran launched a massive missile attack on Israel. This is the second such attack this year, following a similar attack in April. The situation prompted a dire warning from Israeli Prime Minister Benjamin Netanyahu, who vowed “consequences” to retaliate.

These events have plunged global markets into a state of great uncertainty, with a significant impact on cryptocurrencies.

As tensions escalated, the crypto market experienced immediate consequences. Bitcoin price fell below $60,200, down 6% from its previous high of around $64,000. Hence, the market saw a lot of liquidity, with Coinbase reporting that liquidity in the last 24 hours reached a staggering $523.37 million.

Read more: How to trade Crypto on Binance Futures: Everything you need to know

Long positions were primarily affected, shedding $451 million, while short positions were liquidated by more than $71 million. This market volatility resulted in the liquidation of 154,011 traders, the largest single order of $12.66 million occurred in the BTCSDT pair on Binance.

Moreover, US spot Bitcoin ETFs have recorded significant outflows. Total outflows of $242.53 million on Oct. 1 were the largest in one month and the third largest in five months, according to Soso Value data.

The Fidelity Wise Origin Bitcoin Fund (FBTC) saw the biggest outflows, losing $144.67 million, followed by huge withdrawals from the ARK 21Shares Bitcoin ETF (ARKB) and other funds. Conversely, BlackRock's iShares Bitcoin Trust (IBIT) recorded inflows of $40.84 million, continuing its 15-day streak without any inflows.

Market events also affected investor sentiment. The Crypto Fear and Greed Index has now moved into the “fear” category, down from a neutral score of 50 a day ago to 42. This shift underscores the market's vulnerability to external geopolitical disruptions and their potential to influence investor behavior.

Read more: What is the Crypto Fear and Greed Index?

Despite the current downturn, some market experts are positive about Bitcoin's prospects. Andre Dragoš, head of European research at Bitwise, points out that Bitcoin tends to recover well after major geopolitical disasters.

“Geopolitical news should be completely eliminated,” Dragos said.

Echoing this sentiment, a recent BlackRock report positioned Bitcoin as a safe haven during global crises. The report praises Bitcoin's decentralized and non-sovereign qualities, which protect it from geopolitical shocks and economic instability that often harm traditional assets.