- According to many traders speaking with COINOTAG, the cryptocurrency markets could experience a dip due to the ongoing turmoil, especially in risky assets like Bitcoin (BTC).
- Cryptocurrency markets saw a 2% drop on Monday as investors priced in the turmoil that could affect rising oil prices and international trade.
- In 2022, military tensions between Russia and Ukraine caused Bitcoin to lose 7% of its value in a single day, demonstrating the significance and impact of geopolitical conflicts on this niche asset class.
Ongoing conflicts between Israel and Hamas on the fourth day have raised concerns among Bitcoin traders: What will happen next?
Are Bitcoin Traders Worried?
Ongoing tensions in the Middle East could spill over into the cryptocurrency markets, according to many traders speaking with COINOTAG, potentially causing a short-term decline in risky assets, especially Bitcoin (BTC). The conflict between Hamas and Israel extended to its fourth day on Tuesday.
Greta Yuan, Research Head of the digital asset platform VDX, said, “The global market is concerned about the conflict spreading to nearby oil-producing countries, so investors are still relatively sensitive. As geopolitics in the Middle East worsen over the weekend and market risk aversion increases, spot gold has risen by almost 1% as a result.”
Cryptocurrency markets saw a 2% drop on Monday as investors priced in the turmoil that could affect rising oil prices and international trade. Traders who bet on higher prices saw over $100 million in liquidations within a 24-hour period on Monday as alternative currencies sold off. However, cryptocurrency markets are showing early signs of resistance that could build confidence among bulls.
Jeff Mei, Chief Operating Officer of the cryptocurrency exchange BTSE, said, “We observed a temporary drop in Bitcoin’s price due to the shock effect of conflict news, but the price has already stabilized. Cryptocurrency assets have shown resistance to increasing geopolitical turbulence in the past.” Mei also added, “For example, after the US imposed sanctions following its intervention in Ukraine, we saw a significant recovery in Bitcoin and the overall cryptocurrency market – this happened in March.”
In 2022, military tensions between Russia and Ukraine caused Bitcoin to lose 7% of its value in a single day, demonstrating the significance and impact of geopolitical conflicts on this niche asset class. Typically, during such times, investors tend to flock to gold, and assets considered risky see declines.
Oil and Energy Prices Could Be Crucial
On the other hand, some traders suggest that investors should pay attention to changes in the oil and energy markets to understand where things might go for now.
Alex Kuptsikevich, Senior Market Analyst at FxPro, said, “In terms of macroeconomic implications, we need to see the probabilities of expansion and conflict-type risks coming to fruition, we need to pay attention to energy prices again. Rising oil prices trigger selling waves in equities, and we expect monetary policy to become tighter. This is the biggest risk for assets like Bitcoin and the crypto market.” Kuptsikevich concluded:
“However, for now, if we see some form of normalization quickly returning, it would be positive for cryptocurrencies. For now, the probability of decreasing interest in risky assets and cryptocurrencies seems higher compared to recent weeks.”
