The conflict between Israel and Iran, rekindled by a series of military attacks, is shaking the region, but also the global markets, in particular that of cryptos. In a context where volatility is often the key word, Bitcoin seems to be more sensitive than ever to geopolitical events, with a further fall of 4%, which attracts the attention of investors around the world.
The immediate impact of the geopolitical crisis on Bitcoin
The new Israeli attacks on Lebanon and the Iranian response with more than 180 missiles have not left the crypto market indifferent. After crossing the $62,000 mark, Bitcoin suffered a fall of 4% on October 4, 2024, and fell to $60,282, before rebounding beyond this threshold to return above $62,000 on October 6. Indeed, these tensions could lead to an even greater decline, with forecasts indicating a possible plunge towards $55,000. Thus, the increased sensitivity of cryptos to geopolitical events, compared to traditional markets, was once again manifested, while stock markets like the S&P 500 fell only 1%.
Investors agree that the scale of the crypto decline far exceeds that of traditional markets. While WTI crude oil prices edged up 2%, Bitcoin has demonstrated its vulnerability to international crises.
A long-term vision, despite turbulence
Despite this fall, the long term seems more promising for Bitcoin. The US Federal Reserve (Fed) has suggested that interest rates will remain low in 2024, creating a favorable environment for risky assets like cryptos. Thus, accommodative monetary policies from the Fed and the People's Bank of China could well support Bitcoin through 2025, as these two economic powerhouses continue to boost global liquidity.
Additionally, the expected $6 billion in refunds to FTX customers should also contribute to improved market liquidity. This potential injection of capital could provide some breathing space for Bitcoin and other cryptos, as investors could choose to plow those funds back into those assets. Add to this the historic impact of the US presidential elections, which have often been followed by a rise in Bitcoin prices, the outlook for the flagship crypto remains optimistic.
Despite the immediate volatility caused by the geopolitical conflict, Bitcoin's long-term trajectory still appears full of promise, driven by favorable global monetary policies and expected liquidity injections. Nonetheless, developments on the Israeli-Iranian front could continue to shake up markets in the near term. Bitcoin remains an inherently volatile asset, but global economic fundamentals may well work in its favor in the months to come.
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