The cryptocurrency market sell off, which saw the Bitcoin price nose-dive by over 5% late Tuesday, resulted in massive liquidations totaling $526 million over 24 hours.

Long positions accounted for $453 million and short positions for $73 million, according to data from CoinGlass.

At the time of writing, Bitcoin is trading down 3.5% at $61,720 early Wednesday, while Ethereum (ETH) fell over 6% to $2,480, according to CoinGecko data.

It's worth noting that analysts have been saying the setback, however painful, is temporary—not the harbinger of a prolonged bear market. In the coming months, Bitcoin stands to see a boon from China's stimulus, U.S. employment figures, clarify on FTX payments to creditors, and an end to the U.S. election season.

“Markets don’t like uncertainty, and for an emerging industry like crypto, the uncertainty of the November elections will be an overhang,” Samir Kerbage, chief investment officer at Hashdex, told Decrypt earlier today.

The sharp sell-off came after The Israel Defense Forces (IDF) reported that over 100 missiles were launched into Israel from Iran, setting off sirens in major cities, including Tel Aviv and Jerusalem, according to Sky News. The incident marks a severe escalation in regional tensions. Military analyst Alistair Bunkall told the media outlet this attack is "far bigger" than previous incidents, such as those in April.

The geopolitical turmoil was followed by substantial fund withdrawals from Bitcoin and Ethereum spot ETFs. On October 1, Bitcoin spot ETFs recorded a total net outflow of $243 million, the first outflow after eight consecutive days of net inflows, according to data from SoSo Value.

Fidelity's (FBTC) ETF saw a significant outflow of $144 million, while ARKB reported $84.3 million in net outflows. BlackRock's ETF (IBIT) registered an inflow of $40.8 million, but it was insufficient to offset the overall negative trend. Ethereum spot ETFs also faced similar pressure, with net outflows amounting to $48.5 million. Grayscale's (ETHE) and Fidelity's (FETH) lost $26.6 million and $24.9 million, respectively, data shows.

The market downturn also affected crypto-related stocks, with Bitcoin miners bearing the brunt of the sell-off.

Marathon Digital (MARA) saw its shares plummet by up to 9%, while CleanSpark (CLSK) fell nearly 6%. Core Scientific (CORZ) and Riot Platforms (RIOT) both dropped by about 4%. Coinbase, the leading U.S. cryptocurrency exchange, experienced an 8% decline in its share price.

Providing context to the market movements, Avinash Shekhar, Co-founder and CEO of Pi42 said according to historical trends, it will be late October when Bitcoin will show bullish momentum with new highs.

“Fed Chair Jerome Powell's statement about the U.S. economy and commitment toward lower interest rates 'over time' have certainly boosted confidence back into the market. Minor corrections are in the offing in the market. Altcoins, particularly ETH will show growth,” he said in a note sent to Decrypt.

Presto Research stated that last night's BTC price action (BTC -4% vs. gold +0.8%) in the aftermath of Iran's attack on Israel may be puzzling, especially considering BlackRock's recent pitch for BTC as a risk-off asset similar to gold.

The research firm argued that Bitcoin's short 15-year history places it in the early stages of mainstream adoption, resulting in a risk profile more akin to an internet start-up. "This dual characteristic makes BTC a blend of a risk-on and risk-off asset," they added.

Edited by Stacy Elliott.