Bitcoin has fallen sharply after Israel's military said Iran had fired "dozens" of drones toward it in a retaliatory attack.

The bitcoin price has dropped toward $60,000 per bitcoin, down from over $70,000 per bitcoin earlier this week, after the Iranian Revolutionary Guard said it launched “dozens of drones and missiles” at Israeli territory.

The bitcoin price crash dragged down the wider crypto market, hitting top ten coins ethereum, BNB, XRP, solana and dogecoin and wiping $500 billion from the combined crypto market.

Earlier this week, Iran warned Israel would be "punished" for an April 1 attack on its Syria consulate. U.S. president Joe Biden then promised "ironclad" support for Israel, adding the U.S. will "do all we can to protect Israel's security."

However, Iran's response has sparked fears the regional conflict, which has been growing since the October 7 attack on Israel by Gaza's Hamas militants, could escalate into a full scale war.

"Bitcoin dropped like a rock in response to the Iran/Israel news," Rajat Soni, a bitcoin-focused chartered financial analyst, posted to X, adding the reason "the stock market isn't crashing right now because stock investors don't have access to their assets," referring to the bitcoin price trading around the clock while stock markets are closed on weekends.

The Brent crude oil price has climbed to around $90 per barrel this week due to fears a Middle East war could constrain supply, while the gold price, traditionally a safe haven asset, has surged to record highs, up 10% over the last month.

The bitcoin price, helped by surging demand via a fleet of newly approved Wall Street spot bitcoin exchange-traded funds (ETFs) and a looming supply cut known as a halving, has more than doubled over the last six months.

Both gold and bitcoin, which some supporters have branded "digital gold" due to its fixed supply and immutable nature, have dropped over the last 24 hours.

"Bitcoin just flash crashed to just above $61,000," gold bug and bitcoin critic Peter Schiff posted to X. "That's just 26 ounces of gold. At its peak 2.5 years ago one bitcoin was worth 37 ounces of gold. That's a decline of 30%. Digital fool's gold is clearly in a bear market when priced in real gold."