Jannat Ara

$860 Million Crypto Sell-Off Sparks by Escalating Iran-Israel Tensions

A significant sell-off in the crypto market, resulting in the liquidation of $860.82 million in assets and affecting over 261,000 traders, has been attributed to growing apprehensions surrounding the conflict between Iran and Israel. Geopolitical instability historically prompts investors to seek refuge in more stable assets, leading to a downturn in riskier investments like cryptocurrencies.

The Ethereum (ETH) risk reversal indicator, particularly noteworthy in this downturn, displayed a pronounced downside skew, indicating a prevailing sentiment of anticipation for ETH’s price to decline. This sentiment, likely driven by its use as a hedge, translated into a significant drop in ETH’s value by over 5% to $3100.

Furthermore, the negative swing in perpetual swap funding rates, plummeting to over -40%, marked the deepest negative funding seen this year, underscoring a strong bearish sentiment in the market. The forward curve also took a hit, with the front end falling below 10%, painting a gloomy short-term outlook for cryptocurrency prices.

The palpable fear gripping the crypto markets, exacerbated by escalating geopolitical tensions, underscores the vulnerability of digital assets to external factors and sentiment shifts.

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