According to Cointelegraph: Bitcoin faced significant market turmoil after Iran launched 200 ballistic missiles at Israel, causing digital assets to experience their steepest drop in nearly a month. The overall market capitalization of cryptocurrencies fell by an average of 5%, with major tokens facing substantial losses. Nearly half a billion dollars in bullish crypto bets were liquidated, indicating the impact of heightened geopolitical tensions on risk assets.

According to CoinGlass data, Bitcoin futures traders lost over $122 million, with long positions tied to Ethereum (ETH) and other altcoins also seeing massive liquidations. Ethereum long positions alone accounted for nearly $100 million in losses, while smaller altcoins like memecoin Pepe (PEPE) contributed an additional $10 million. In total, over 154,770 traders saw their positions liquidated within the past 24 hours, amounting to approximately $521 million in total losses.

The heightened tensions between Iran and Israel also saw Bitcoin slide to as low as $60,300 before recovering slightly above $61,500. The drop marked Bitcoin’s worst start to October, a month historically known for bullish price action, which typically sees an average increase of 22.9%. While investors were optimistic about BTC surpassing its record high of $73,798, the market downturn shifted sentiment.

With Bitcoin's recent drop, the question of whether BTC is a "safe haven" asset has once again surfaced. As global uncertainty increased, traditional safe-haven assets like gold saw a surge in demand. Gold prices rose by 1.4% to $2,665 per ounce, nearing its all-time high, while crude oil prices spiked as much as 7% to reach $72 per barrel. In contrast, Bitcoin’s drop by over 3% emphasized its correlation to risk assets such as tech stocks, which also plummeted during the heightened geopolitical tension.

Israeli Prime Minister Benjamin Netanyahu responded to the attacks by vowing retaliation, which further increased investor caution. "Iran made a big mistake tonight - and it will pay for it," Netanyahu said in a statement.

Jeroen Blokland, the founder of Blokland Smart Multi-Asset Fund, noted that many investors appeared to be selling Bitcoin in favor of gold. Meanwhile, precious metals analyst Jesse Colombo highlighted that Bitcoin’s behaviour during geopolitical crises resembles that of other risk assets, supporting the idea that BTC has yet to prove itself as a true safe-haven asset.

Despite the debate, BlackRock CEO Larry Fink suggested that Bitcoin could still serve as an inflation hedge, speaking on its potential role similar to gold. Markus Thielen, Head of Research at 10x, added that Bitcoin still needs time to fully transition into its potential role as a substitute for gold, especially in scenarios where individual ownership of gold becomes restricted. He noted that until then, Bitcoin’s price will remain influenced by economic and liquidity cycles.

As the market navigates these challenging times, the outlook for Bitcoin remains mixed, with investors closely monitoring macroeconomic trends, geopolitical developments, and the cryptocurrency's correlation to other risk assets.