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Bitcoin traders who were banking on a seasonal rally in October faced an early test of their expectations after escalating tensions in the Middle East sent global markets into a tailspin and cryptocurrencies slumped.
The digital currency fell by the most in a month on Tuesday, after Iran fired about 200 ballistic missiles at Israel in a sharp escalation.
Bitcoin pared some of its losses on Wednesday to trade at around $61,700 this morning, up 1.4%, according to Bloomberg.
Bitcoin fell about 3% in early October trading, in contrast to its average gain of 20% over the past months, according to data compiled by Bloomberg.
This strong rally had some traders expecting a rise beyond the March record high of $73,798, until the regional conflict in the Middle East came along and lowered expectations.
Sean McNulty, head of trading at Arbelus Markets, claimed the sell-off was a “temporary setback” as the Federal Reserve began cutting interest rates.
The trading manager said that the government that emerges after the US presidential election in November is also likely to be more friendly towards cryptocurrencies.
“The seasonal trend of October being the best month for Bitcoin is still alive and well,” McNulty added.
Markets are currently bracing for an escalation in the conflict as Israeli Prime Minister Benjamin Netanyahu vows to respond to Iranian strikes.
U.S. stock futures were mixed on Wednesday, while oil prices rose amid supply concerns.
Zach Bradford, CEO of Bitcoin mining company CleanSpark, has predicted that the value of Bitcoin, the world's largest cryptocurrency, will rise to nearly $200,000 within the next 18 months.