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Crypto trading firm QCP Capital says the “slight sell-off” in crypto markets following Iran’s recent attack on Israel reflects healthy demand for the risk assets market.
The Crypto Market Is Always a Good Bid for Risky Assets
Although Iran launched more than 180 missiles at Israel yesterday, the sale of traditional financial instruments (TradFi) has been relatively quiet. The S&P 500 closed 1% lower, while US benchmark West Texas Intermediate (WTI) oil prices rose 2%.
In contrast, the digital asset market was hit harder, with Bitcoin (BTC) sliding more than 5% following the Iran attack. The total crypto market has eroded more than 6% in value while asset sales have exceeded $550 million in the past 24 hours, data from CoinGlass it shows.
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Of reportQCP Capital says the main cryptocurrency appears to have found strong support at the $60k level. However, the company warns that continued expansion in the Middle East may force BTC to drop to $55k.
Regarding the market sell-off seen yesterday, the trading company said:
Middle East geopolitics will steal the limelight for now, but the shallow selloff suggests the market still has a good bid for risk assets. These small setbacks should not detract from the big picture.
The report also noted that China’s recent economic policy actions are similar to those of Japan in the 1990s. Notably, the Bank of Japan (BoJ) has tackled deflation by reducing interest rates, introducing negative interest rates, and starting a rate reduction program. The report added:
Monetary fluctuations from the PBoC and monetary support are likely to support asset prices in China, and bullish sentiment is likely to spread globally to support risk assets, including crypto.
In addition, the report pointed to the Chairman of the US Federal Reserve (Fed) Jerome Powell’s recent strong words at the National Association for Business Economics, indicating further reductions in interest rates in 2024.
In context, the Fed to cut prices for the first time in 4 years on September 18. Later, financial markets around the world experienced an increase in the price of risky assets, such as stocks and cryptocurrencies.
The report concluded that “asset prices are expected to remain supported through 2025”, encouraged by sharp interest rate cuts by both the world’s largest (Fed) and third largest (People’s Bank of China) banks.
What To Expect From Bitcoin In Q4 2024?
Although the Iran-Israel conflict had a direct impact on the price of BTC, crypto analysts remain optimistic about a potentially strong Q4 2024. One reviewer suggested that the recent dip could represent a “quarter low” for BTC.
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Another crypto analyst is Eric Crown is open that BTC could reach a new all-time high (ATH) in Q4 2024, based on his analysis of the cryptocurrency’s historical performance in the months following September. Bitcoin is trading at $61,992 at press time, down 1.2% in the last 24 hours.
Featured image from Unsplash, chart from Tradingview.com