• Bitcoin experienced an 8% decline late on Saturday evening following confirmation from U.S. officials about the imminent attack.
• Amid escalating tensions in the Middle East, digital coins, including Bitcoin, were among the few risk assets traded over the weekend, leading to the initial drop in prices.
• By Sunday morning, Bitcoin had recovered, surpassing the $64,000 mark, while other cryptocurrencies like ether also witnessed significant declines of up to 10% in some instances.

Throughout the year, Bitcoin’s value has been impacted by a deteriorating macroeconomic environment and the collapse of industry giants like FTX and Terra.

STR | Nurphoto via Getty Images

The cryptocurrency market faced substantial selling pressure overnight on Saturday due to an unprecedented drone and missile attack by Iran on Israel.

Bitcoin’s value plummeted by 8% late on Saturday evening as reports of the ongoing attack were confirmed by U.S. officials. Given that digital coins were among the limited risk assets being traded during the weekend, the decline was viewed as an immediate response to the heightened tensions in the Middle East.

While Bitcoin had been hovering around \(70,000 on Saturday evening, it dropped below \)62,000, based on data from the Bitstamp exchange. However, it rebounded above $64,000 by Sunday morning. Concurrently, other cryptocurrencies, such as ether, also experienced substantial sell-offs, with some seeing declines of up to 10%.

According to Bloomberg, the recent sell-off in Bitcoin marked the most significant drop in over a year, despite the coin achieving new highs recently due to inflows into U.S. spot Bitcoin ETFs, which have been influencing the cryptocurrency’s price movements.

In a significant turn of events in the Middle East, the overnight attacks represented the first direct assault on Israel from Iranian territory. Israel reported identifying 300 “threats of various types” and successfully neutralizing “99%” of those aimed at Israeli territory.

The barrage of drones and missiles targeting Israel was purportedly in retaliation to a suspected Israeli strike that resulted in the deaths of senior Iranian officials in Syria.

Following the attacks, the Iranian currency plummeted to a historic low of 705,000 rials/USD on the unofficial market around 10:30 a.m. local time on Sunday, as reported by foreign exchange monitoring site Bonbast.

At 10:23 a.m. London time, the Tel Aviv Stock Exchange’s main index, the TA-35, registered a 0.38% decline.

—CNBC’s Ruxandra Iordache contributed to this article.