Cryptocurrencies Tumble Amid Geopolitical Risks: Bitcoin Plunges Below $66,000

Cryptocurrencies took a hit on Friday as traditional markets experienced a wave of risk-off sentiment amid escalating geopolitical tensions, causing a ripple effect in the digital asset space.

Bitcoin, the largest cryptocurrency by market capitalization, saw a sharp decline below $66,000 after briefly touching $71,000 earlier in the day. Other smaller cryptocurrencies fared even worse, with some experiencing losses of up to 20%.

The sell-off also led to the largest leverage washout in a month, with approximately $850 million in leveraged derivatives trading positions liquidated across all digital assets, according to CoinGlass data.

The downturn in the cryptocurrency market coincided with a broader decline in traditional markets, as fears of a potential conflict in the Middle East rattled investors. U.S. authorities issued warnings of a possible attack by Iran on Israel, leading to a surge in demand for safe-haven assets such as Treasury bonds and the U.S. dollar.

Despite the short-term market volatility, digital asset investment firm Ryze Labs remains optimistic about the long-term prospects for cryptocurrencies. In a commentary on Friday, the firm highlighted the upcoming tax season as a potential driver of market softness but expressed confidence in a more positive outlook as policymakers adjust monetary policy to support the asset class.

As investors navigate through the current market turbulence, the future of cryptocurrencies remains uncertain, with both short-term challenges and long-term opportunities on the horizon.