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Bitcoin, the world’s largest cryptocurrency by market capitalisation, fell the most in more than a year late on Saturday, as Iran's attack on Israel sparked fears of the conflict in the Middle East escalating further.
It dropped by 7.7 per cent on Saturday, the biggest decline since March last year, as the wider cryptocurrency market also fell.
Bitcoin pared some of the losses and was trading at $64,319 as of 9.47am UAE time on Sunday.
Most other major coins including Ether, Solana and Dogecoin also recorded losses on Saturday.
Iran fired a barrage of more than 200 drones and missiles at Israel on Saturday, in retaliation for an Israeli strike on its Damascus embassy compound on April 1 that killed two senior Iranian commanders and other members of its elite force.
Iran's reprisal attack on Saturday was thought to mark the first time Tehran had struck Israel directly from Iran, instead of relying on proxies in Lebanon, Syria and elsewhere. The move has led to fears of a war between Iran and Israel.
Bitcoin hit a high of $73,805.27 on March 14, after the UK’s financial services regulator allowed applications for crypto asset-backed exchange-traded notes to trade on the London Stock Exchange.
It was also supported by strong demand for US spot Bitcoin exchange-traded funds, approved in January.
The expected Bitcoin halving this month, when the amount paid to miners is reduced in a programmed move every four years to reduce supply and maintain its scarcity value, also added to the rally.
However, it has since lost momentum.
A continuation of the crypto sell-off “is probably contingent on further escalation”, Zaheer Ebtikar, founder of crypto fund Split Capital told Bloomberg.
Leverage “has gotten completely overwhelmed in the last three days, so that’s caused prices to materially deteriorate” in digital assets, he said.
