coindesk.com  + 1 more 01 October 2024 15:35, UTC

Cryptocurrencies started the Tuesday U.S. session with a nosedive as headlines of escalating tension in the Middle East prompted investors to flee risk assets.

Bitcoin (BTC), the largest digital asset by market cap, climbed to around $64,000 during European hours before quickly tumbling to $62,500 as Axios reported the White House as having indications Iran was prepping an imminent ballistic missile attack against Israel. At press time, bitcoin was lower by about 2% over the past 24 hours to $62,700.

The broad-market digital asset benchmark CoinDesk 20 Index was down a similar amount over the same period, with ether (ETH) and solana (SOL) performing a hair better than the average and Polkadot (DOT), Uniswap (UNI), Polygon {{POL}} and Hedera (HBAR) doing somewhat worse.

Key U.S. stock indexes opened the day lower, with the S&P 500 and the tech-heavy Nasdaq down 1.2% and 2%, respectively, in the early hours of the session. Gold jumped 1.2% to $2,690 per ounce and neared its record high just above $2,700 set last week, while WTI crude oil surged 3% to $70 per barrel.

The diverging price action of gold and bitcoin highlighted the leading digital asset’s high correlation with risk-on assets like stocks, not to mention gold fulfilling its traditional role as a safe-haven asset. The 30-day rolling correlation between BTC and the S&P 500 is now approaching yearly highs at 0.62, K33 Research noted in a Tuesday report.

Bitcoin’s Tuesday drop was also reminiscent of the price action at the start of this current Middle East tumult nearly one year ago today, not to mention similar instances earlier this year in April and July when crypto assets knee-jerked lower in reaction to headlines from that region.