Bitcoin and other cryptocurrencies experienced a significant rebound in early Asian trading on Sunday, attributed to the confirmation of the death of Iran’s supreme leader during a military campaign involving the United States and Israel. Following the announcement, Bitcoin surged by as much as 2.21%, reaching $68,196, while Ether, the second-largest cryptocurrency, rose approximately 4.58%, crossing the $2,000 mark.
The crypto markets, which operate continuously, faced turbulence following the initiation of the military action. In response, Iran launched retaliatory strikes across various locations, including Israel, Qatar, the United Arab Emirates, and Bahrain, and threatened further actions against US-affiliated bases in Iraq. Despite the early chaos, there was a noticeable recovery in digital asset values, with Bitcoin’s price rebounding significantly after initial reports surfaced regarding Ayatollah Ali Khamenei’s death.
Market analysts indicate that traders generally anticipate limited negative economic repercussions from the Iran situation, which has led to an uptick in demand for Bitcoin options. Markus Thielen, head of research at 10x Research, noted that traders are positioning themselves in anticipation of the forthcoming Federal Reserve meeting. By Sunday morning, cryptocurrencies had regained approximately $32 billion in market value after a significant loss of about $128 billion the prior day, as reported by CoinGecko.
Hayden Hughes, managing partner at Tokenize Capital, pointed out that Bitcoin, being a continuously traded asset, absorbed much of the selling pressure from the wider financial markets, including equities and commodities, which would have otherwise increased volatility. He emphasized that real price discovery would occur when US equity markets and Bitcoin ETFs reopen, considering the ongoing missile strikes and geopolitical tensions within the Gulf region.
Despite the recent volatility, Bitcoin’s weekend losses extend a broader selloff in the crypto markets, which began with a massive liquidation of leveraged positions totaling $19 billion in October. Since then, Bitcoin has declined by around 50% from its peak of over $126,000 reached earlier that month, struggling to capitalize on the upward trends observed in gold and other traditional safe-haven assets.
Justin d’Anethan, head of research at Arctic Digital, suggested that significant events unfolding over weekends often position Bitcoin as a pressure valve, highlighting that the initial market impact was less severe than anticipated, particularly given the clearing of excessive leverage and exhausted sellers.
In the absence of trading activity in traditional markets, digital-asset investors turned to decentralized exchanges, such as Hyperliquid, where tokenized commodities gained traction. Prices for contracts linked to oil, gold, and silver saw an increase, reflecting market participants’ efforts to hedge against geopolitical risks.
Additionally, there was a marked increase in selling pressure on Bitcoin derivatives, with a sell volume spike of approximately $1.8 billion occurring within a single hour on Saturday, according to CryptoQuant. Analyst Sylvain Olive noted that this trend demonstrates seller dominance and heightened short-term risk aversion. He warned that market dynamics are currently driven more by emotional responses and risk management concerns than by fundamental structural changes, suggesting a cautious approach for traders in the evolving landscape.
