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The price of Bitcoin fell sharply to $60,164 on Tuesday following the escalation of tensions in the Middle East, where Iran launched a missile attack on Israel. The increase changed global markets, affecting both traditional and crypto assets. Bitcoin was notably unsecured -4% down.
Market participants, who expected a strong trend in the month called “Uptober,” were forced to reassess as the broader market changed risks. However, the reaction to geopolitical issues may be overstated, according to several analysts.
Will Bitcoin Continue to Fall?
Macro strategist Alex Krüger (@krugermacro) warns against sudden changes in market sentiment. Of X, he writes, “It was amazing to see everyone cheering and chanting ‘Uptober’. From doom to darkness, heartbreak […] Despite the conflicts in the Middle East, this is an election year in the US. A lot of uncertainty is still ahead.”
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Krüger highlights the volatility that is often seen in financial markets during US election years, noting, “In election years, the month of October is the most volatile, and rates historically show slightly negative returns.” He added that speculative markets tend to react to uncertainty, and given the proximity of the election and the upcoming earnings data on Friday, further volatility can be expected.
“Of course if the payrolls come in strong this coming Friday, the shares may spread, as we are on the ‘good news is good news’ plan. But the time to press and hold is after the election, which may start on Election night itself,” said Krüger.
Prominent crypto analyst CRG (@MacroCRG) notes that Bitcoin’s price strength has recovered despite short-term market turmoil. “That might be the quarterback for the boys. Markets love to put early highs/lows in the candle. Also, geopolitical movements have a high tendency to fade. We may still see chaos in terms of Israel’s response, but the market may be expecting this.”
Like Krüger, he points out that the increase in money in the market can provide support for Bitcoin, saying, “Liquidity will start to increase from now on, which BTC should quickly absorb.” Overall, CRG remains bullish on Bitcoin’s long-term trajectory, asserting that despite short-term uncertainty, “$100k BTC is coming.”
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Singapore-based brokerage QCP Capital also offers its view on the impact of the conflict. In their latest investor letter, the company writes: “The Israeli-Iranian conflict has intensified, with more than 180 missiles launched by Iran. Despite this, the reaction in traditional financial markets has been muted. The S&P closed only 1% lower, while crude oil (WTI) rose 2%.
However, the crypto market saw a sharp decline, with Bitcoin facing heavy selling pressure. “BTC closed 4% lower, with support holding around the $60k level. A further escalation of the dispute could push BTC to the $55k mark,” QCP noted.
Despite the current impact, QCP Capital’s report reiterates that the broader economic environment remains in favor of risk assets in the medium term. “Middle East geopolitics will steal the limelight for now, but the modest selling suggests that the market remains confused about risk assets. This minor setback should not detract from the bigger picture.”
They also point to global monetary policies as an important factor. “Monetary volatility from the PBoC and monetary support is likely to support commodity prices in China, and bullish sentiment may spread globally to support risk assets, including crypto. […] “Commodity prices are expected to remain supported through 2025, as both the central bank (Fed) and the 3rd largest (PBoC) in the world begin their easing cycles in earnest,” QCP concluded.
At press time, BTC traded at $61,286.
The featured image was created with DALL.E, a chart from TradingView.com