Israel attacked Iran today, further escalating tensions in the Middle East and casting a shadow over the crypto market. As a result, Bitcoin fell below $60,000, a drop of more than $7,000 since Iran first attacked Israel on April 14. There is only one day left before Bitcoin's historic halving event, which adds more uncertainty to the market after the halving.
Panic in the crypto market intensifies, Bitcoin hits new low since February 29
Since Iran's missile attack on Israel on April 14, panic in the crypto market has risen sharply, but Iran has since responded in many ways that it does not want to further escalate tensions, and the global market has eased. At the same time, there are reports that the United States and Israel have reached an agreement not to launch a counterattack against Iran. In addition, Hong Kong regulators have subsequently approved Bitcoin and Ethereum spot ETFs, and Bitcoin once rebounded to around US$67,000.
On April 19, Israel's attack on Iran caught global markets off guard, causing stock markets to fall, while oil and safe-haven assets, including U.S. Treasuries and the dollar, rebounded. The 10-year U.S. Treasury yield fell about 10 basis points, offsetting recent selling pressure. The U.S. dollar index rose, while other safe-haven currencies, including the Swiss franc, yen and gold, also strengthened. Oil prices rose more than 3%, with Brent crude oil briefly breaking through $90 a barrel and WTI crude oil soaring to nearly $86 a barrel. U.S. stock index futures fell more than 1%, and Asian stocks also fell, with Japanese and Korean stocks falling more than 2%, and Australian stock indexes falling more than 1%.
The crypto market was even more affected, with Bitcoin falling below $60,000 at one point, hitting a new low since February 29.
Can halving drive a rebound in the crypto market?
Many people are expecting the upcoming halving event to drive a market rebound, but the reality may not be so easy. The situation in the Middle East is tense, inflation data is pessimistic, and the probability of the Federal Reserve cutting interest rates this year is disappearing. From the original expectation of 6 rate cuts this year, it has become 3 times before, and even 3 times now is difficult to achieve.
Deutsche Bank: Unlikely
Deutsche Bank crypto analysts said that a sharp rebound is unlikely after the Bitcoin reward will be halved in the next few days, as the market has partially digested the news. But the bank's analysts Marion Laboure and Cassidy Ainsworth-Grace said that looking forward, we continue to expect prices to remain high due to expectations of future spot Ethereum ETF approval.
JPMorgan: Bitcoin will see a downward trend
Analysts at JPMorgan believe that the price of Bitcoin may weaken after the halving. The investment bank's analysis of open positions in Bitcoin futures contracts shows that after the halving, it believes that Bitcoin will go down because the market is still overbought. "Limiting supply sounds like a move to stimulate the bull market, but things are not that simple. BTC is already in an overbought phase." At the same time, analysts believe that the lack of venture capital funds in the crypto field will also lead to a decline in the value of Bitcoin.
QCP Capital: Be cautious when buy the dips
QCP Capital, a crypto investment institution in Singapore, similarly believes that the crypto market is becoming increasingly nervous, with ETH risk reversals tilting deeper to the downside (now -20%). Such tensions are expected to continue as the conflict between Iran and Israel develops. BTC's perpetual contract funding rate is basically flat, with double-digit yields maintained at the back end of the curve. The perpetual contract funding rates of other mainstream currencies are also generally negative, indicating that a large amount of long leverage has been cleared. Given the current general nervousness in the market, it is recommended to be very cautious in buy the dips by buying BTC or ETH at a significant discount to the spot price.
Santiment: Bottom reached shortly after halving
“Historically, BTC prices have moved in the opposite direction of mass trader expectations,” blockchain analytics platform Santiment said in a market insights article, adding that the market could bottom out before or shortly after the halving.
Bitcoin mining faces difficulties
The Bitcoin halving means that the Bitcoin mining business will become more difficult, especially for publicly traded mining companies. Today, Bitcoin mining is dominated by publicly traded companies that operate warehouses full of computers and consume a lot of energy. The halving poses a potential threat to this business model, and Adam Sullivan, CEO of mining giant Core Scientific, said that some smaller mining operations may be forced to close down. Because after the halving, large companies will be able to continue to purchase equipment, while small businesses will struggle.
However, for now, the top five Bitcoin miners are not selling Bitcoin. According to a report by Bitwise on April 10, in the first quarter of 2024, the total amount of Bitcoin sold by the top five mining companies fell to about 2,000, reaching the lowest level in two years. This is good for the market, after all, there is no increase in selling pressure.
Whether the situation between Israel and Iran can be eased will directly affect the future trend of the crypto market
Next, let's summarize the latest information on the current situation in the Middle East (the above is the latest news):
- Iranian officials told Reuters that Iran was not attacked by missiles and that the explosions heard in Isfahan were the result of the activation of Iran's air defense system.
- The United States does not support (Israel's) response to Iran's April 13 attack, CNN quoted a US official as saying.
- The sources said the United States was not involved in the attacks against Iran, but Israel did inform Washington of its intention to launch an attack.
- Iran said there was no air strike and only shot down a quadcopter. Adam Button, an analyst at the financial website Forexlive, believes that it seems that Iranian officials do not want to beat the drums of war anymore.
- Iran says its nuclear facilities are safe, but tensions remain high.
- Agency: If Iran retaliates again, it may trigger a regional war.
- US Republican Senator Rubio: Israel can attack Iran without entering Iranian airspace.
- Iranian media: An explosion was heard near a military base and military radar may be one of the targets of the attack.
- According to BNO News: Iranian officials said there were no airstrikes in Isfahan or other parts of the country. They (Israel) just made a failed and humiliating quadcopter flight attempt, which ended up being shot down.
- Two U.S. officials said Israel attacked targets in western Iran.
- Market news: Iran's Islamic Revolutionary Guard Corps said Iran will retaliate against Israel's nuclear facilities.
- According to the Islamic Republic News Agency (IRNA): Iran's air defense system has been repelling air strikes on several areas of Iran.
- According to Iranian state television, a powerful explosion occurred near the Iranian capital Tehran.
- According to Iranian media reports, the Iranian Revolutionary Guard Corps (IRGC) announced that all bases and camps in the country have entered the highest state of alert.
