Cryptocurrencies fell heavily and bitcoin broke below $60,000 on Friday in a rush out of risky assets following reports of an Israeli missile strike on Iran.

Bitcoin slid more than 5.5% to $59,961 in the Asia session as the U.S. dollar rose broadly. Ether fell by a similar margin, dropping below the $3,000 barrier to $2,895.

Israel launched an attack on Iranian soil on Friday, sources said, days after Iran launched a drone strike on Israel.

Iranian media reported explosions, but an Iranian official told Reuters those were caused by air defense systems. State media said three drones over the central city of Isfahan had been shot down.

Israel's leadership and the military were silent early on Friday.

By 0600 GMT, as these details emerged, safe-haven assets such as oil, gold and bonds which had rallied sharply on initial news of the attack were off their highs.

"I think markets are at this stage in a flight to safety mode," said Moh Siong Sim, currency strategist at Bank of Singapore. "Right now, we're still in a situation where we know something has happened. But we need to understand the degree of the degree of retaliation."

Bitcoin was back up at $62,300 but still down 2% on the day. Ether was also back above $3,000.

The decline in bitcoin comes just hours ahead of the cryptocurrency's 'halving' on Friday - a change to its underlying technology designed to cut the rate at which new bitcoins are created.

 

(Reporting by Tom Westbrook; Editing by Muralikumar Anantharaman and Sonali Paul)