By Suvashree Ghosh and Sidhartha Shukla

(Bloomberg) -- Bitcoin and other cryptocurrencies sank after Israel launched airstrikes on Iran in a major escalation.

(Pixabay)

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The largest digital asset slid as much as 3% on Friday morning in Singapore to dip below $103,000 before paring losses, according to data compiled by Bloomberg. Second-ranked token Ether had at one point shed about 7.6% of its value.

The selloff came after explosions were heard in Tehran, according to local media. Israeli Defense Minister Israel Katz said he’s declaring a special state of emergency due to Israel’s “preemptive strike against Iran.” Israel is anticipating a retaliatory drone and missile attack, Katz said.

“Crypto is reacting negatively to news of Israel strikes in Iran, in line with major risk assets,” said Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for crypto derivatives. “We expect to see technical support around $101,000, but geopolitical news will drive price action from here in the short-term.”

Stocks fell along with equity-index futures while investors rushed to the safety of havens such as Treasuries in the immediate aftermath of the strikes. Crude oil jumped more than 9% while gold also rose.

Bitcoin’s decline shows that while it has “occasionally traded as a macro hedge, in moments of acute risk like this one, particularly involving kinetic military conflict, liquidity is prioritized over narrative,” said Sean McNulty, derivatives trading lead of APAC at digital-asset prime brokerage FalconX Ltd. “Traders raise cash, rotate into dollars, and reduce leveraged or volatile exposure.”

Over $1 billion dollars’ worth of long positions across all cryptocurrencies were liquidated in the past 24-hours, according to Coinglass data.

Tony Sycamore, market analyst at IG, said in a note that “a further deterioration in risk sentiment” is likely ahead of the weekend.

Bitcoin was trading at $103,540 as of 10:40 a.m. in Singapore on Friday.

(Updates throughout)

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