The S&P 500 and Nasdaq also fell after a report that Iran was preparing an imminent missile attack on Israel.
Cryptocurrencies fell during Tuesday's U.S. session as headlines about rising tensions in the Middle East prompted investors to flee risk assets.
Bitcoin (BTC), the largest digital asset by market cap, rose to around $64,000 during European hours before quickly falling to $62,500 as Axios reported that the White House had indications that Iran was preparing an imminent ballistic missile attack on Israel. Another drop occurred to $61,000 when the Israel Defense Forces (IDF) said Iran had launched missiles at the country.
BTC quickly recovered from the lows to near $62,000, still down about 2.5% over the past 24 hours.
The broad-market digital asset benchmark CoinDesk 20 index fell nearly 5% over the same period, with ether (ETH) faring slightly better with a 3.8% loss to just above $2,500. Major altcoins suffered even steeper pullbacks, with Solana (SOL), Polkadot (DOT), Avalanche (AVAX), Uniswap (UNI), Render (RNDR), Polygon ({{POL}} and Hedera (HBAR) all suffering declines of 5% to 10%.
Major U.S. stock indexes opened the day lower, with the S&P 500 and the tech-heavy Nasdaq trading 1% and 1.7% lower, respectively, in the final hours of the session. Gold jumped 1% to $2,690 an ounce and approached its record high just above $2,700 set last week, while WTI crude oil rose 3% to more than $70 a barrel.
Gold and bitcoinâs divergent price action has highlighted the leading digital assetâs high correlation with risk assets like stocks, not to mention gold fulfilling its traditional role as a safe haven asset. The rolling 30-day correlation between BTC and the S&P 500 is now approaching yearly highs at 0.62, K33 Research noted in a Tuesday report.
Bitcoinâs drop on Tuesday was also reminiscent of the price action at the start of this current Middle East turmoil nearly a year ago, not to mention similar instances earlier this year in April and July when crypto assets suddenly dropped in reaction to headlines from that region.
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