- The Israeli-Iranian conflict has escalated with limited impact on traditional financial markets but a stronger hit to cryptocurrencies like Bitcoin.
- Bitcoin dropped 4%, finding support at $60,000, but further escalation could push it lower.
The ongoing Israeli-Iranian conflict has intensified, drawing global attention and impacting financial markets. Earlier this week, Israel started an invasion of Lebanon on the ground, and yesterday, Iran responded with more than 180 missiles. However, the traditional financial markets (TradFi) responded only mildly to these events. The S&P 500 declined by 1 % at the same time as WTI crude oil increased by 2%. Given today’s price movements, we do not expect any significant further losses in these sectors.
However, the cryptocurrency market was not spared; instead, it received a bigger blow. Bitcoin (BTC) closed 4% lower, currently finding some support at the $60,000 level. According to data from QCP, with further geopolitical tensions, BTC may fall to $55,000. This aggressive selloff shows that crypto markets are way more sensitive to price swings than other asset classes, but risk sentiment remains positive.
Popular analyst Justin Bennett also estimates that Bitcoin may decline to $57,000.
Justin Bennett has predicted a decline in Bitcoin’s price to $57,000 because of the bearish market outlook. The analyst noted that this level is important for preserving a positive attitude towards cryptocurrency. He also added that the price of Bitcoin is still bearish as long as it is below $62,000.
Although the Bitcoin price briefly surpassed $61k again, Bennett warned that the asset is still under pressure after failing to hold $64,700. He also highlighted that as $57,000 is quite possible, $51,000 should not be completely written off, albeit not very possible.
Macroeconomic Factors Drive Optimism for Bitcoin’s Future
Despite the short-term risks, the long-term outlook for Bitcoin remains bullish. Several macroeconomic factors are expected to drive Bitcoin’s price recovery. Recently, Jerome Powell, the chair of the United States Federal Reserve, hinted that interest rates are expected to remain low in 2024.
Since the Fed and the PBoC have continued to cut rates, global risk assets should continue to hold up well through 2025. These actions by two of the world’s largest central banks reflect a positive environment for risk assets despite the current geopolitical tensions.
In addition, the repayments from FTX customers, which are expected to be $6 billion in the near future, may help improve the market’s liquidity. A cash injection could lift Bitcoin and other digital currencies as consumers spend their newly received money on cryptocurrencies.
Following reports from Crypto News Flash, the White House previously predicted a potential Iranian attack on Israel, which led to the liquidation of $250 million in futures positions within 24 hours. U.S. equities also faced a sharp sell-off as investors shifted towards traditional safe-haven assets.
Finally, with the US presidential election scheduled in a few weeks, markets may find their footing. In the past, bitcoin has been bullish after elections, which means there could be a reason to be bullish on it in the future.
