Bitcoin Faces Significant Drop Amid Rising Middle East Tensions, CoinDesk 20 Sees Largest Decline in Weeks

Tensions in the Middle East caused Bitcoin (BTC) to drop during the early hours of trading in Asia on Wednesday. The CoinDesk 20, which tracks the most liquid digital assets, saw its biggest decline in weeks.

Bitcoin climbed above $61,500 in the morning, but it had fallen to around $60,300 late Tuesday. The rising conflict in the region has dampened hopes for a rally in what is typically Bitcoin's strongest month.

On Tuesday, Iran launched about 200 ballistic missiles at Israel. This move raised concerns about further attacks, as Israeli Prime Minister Benjamin Netanyahu promised retaliation. This strike followed recent Israeli attacks on Lebanon.

BTC experienced its largest drop in over a month. At one point, it fell by 6%, with 24-hour losses reaching 3.5%. Traders at Presto Research noted that this was a troubling start to Bitcoin's historically strong month.

According to Polymarket, there's a 49% chance that Israel will respond to Iran by the end of the week.

October has historically been a strong month for BTC, with only two losing years in the last 11, as Presto pointed out. They also highlighted gold's recent performance as a sign of the different maturity levels of these two assets.

“Last night’s BTC price action (BTC -4% vs. gold +0.8%) after Iran’s attack in May is puzzling,” wrote researchers led by Peter Chung. “This difference reflects how these two assets are at different stages of maturity.”

The broader CoinDesk 20 (CD20) index fell by 4.7%, marking its most significant drop in recent weeks.

“Gold has a 5,000-year history as a store of value, leaving little room for new effects. BTC, while sharing many qualities that make gold a good store of value, has only a 15-year history. This means it’s still in the early stages of mainstream adoption,” the researchers added.

Among major tokens, Dogecoin (DOGE) led the losses, dropping 8% in the last 24 hours, according to CoinGecko data. XRP, Solana’s SOL, BNB Chain’s BNB, and ether (ETH) saw declines of up to 6%.

Smaller tokens with market caps under $2 billion faced the worst losses. Sei Network’s SEI, memecoin floki (FLOKI), and Starknet’s STARK fell by as much as 16%.