It was an unexpected week. October broke the 'Uptober' outlook that a pleasant rise would continue, and the Bitcoin price temporarily fell below $60,000. Fortunately, it started to rebound over the weekend, and as of 1:00 AM on the 7th, when I am writing this article, it is showing a solid trend at the $62,600 level.
The key factor in the decline was the renewed conflict in the Middle East. Israel invaded Lebanon and started a ground war with Hezbollah, a pro-Iranian militant group in Lebanon, and was eventually hit with ballistic missiles by Iran on the 2nd. The price of West Texas Intermediate (WTI) crude oil in the US soared by nearly 4%, and the US stock markets, including the Nasdaq and Dow Jones, also fell by nearly 2%. On the other hand, the price of gold, a safe asset, rose by about 0.7%.
The price of Bitcoin, which had been trending downward due to the change of the Japanese Prime Minister on the 1st, seemed to come to life for a moment, recovering to $64,000 on the same day, but fell below $62,000 with news of Iran's missile launch . The price of Ethereum plummeted to the $2,400 level .
What caused the price of Bitcoin, which had been moving sideways in a weak consolidation, to fall once more was the remarks of U.S. President Joe Biden. In a conversation with reporters on the 4th (local time) about the Middle East conflict, he said that Israel, which was hit by a ballistic missile, was discussing striking Iranian oil refineries. From Israel’s perspective, it would naturally retaliate if it was hit, but if the target was an Iranian oil refinery, this conflict could escalate to the level of a Middle East war. Along with Biden’s remarks, international oil prices soared by nearly 5% that day.
The rebound in Bitcoin prices was triggered by the employment figures released on the 5th. In fact, employment figures were released for four consecutive days starting Tuesday last week, and the numbers were generally quite bullish.
In particular, the unemployment rate and the number of non-farm payrolls in September announced on the 5th could be interpreted as indicating that employment is strengthening again. This is a completely different situation from what the Federal Reserve (Fed) said in September at the Federal Open Market Committee (FOMC) that "employment is at risk, so we decided to cut interest rates by 50bp."
Anyway, interest rates have already been lowered by 50bp, and the US economy is still going strong. Investment money is flowing into risky asset markets such as the US stock market, and Bitcoin is also seeing some of the windfall.
Major coins such as BTC, ETH, and XRP are rebounding after confirming support lines
For now, the asset decline caused by the Middle East conflict seems to be coming to an end. Major coins with the highest market capitalization, such as Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP), are also finding support and rebounding all at once . Of course, if Israel counterattacks Iran with missiles, etc., the market will freeze again.
Bitcoin prices are in a difficult position as two major events have diverged from each other over the past week. Even if we leave aside the Israeli counterattack, which is completely unexpected, the US employment data, which is showing signs of recovery, is a problem. If the US employment data revives, it will naturally be difficult for the Fed to further cut interest rates in the future. This is because there will be no justification.
Ultimately, Bitcoin investors will have to decide whether a robust U.S. economy is good for Bitcoin prices, or whether the Fed’s large-scale interest rate cuts will cause the dollar to fall relative to Bitcoin prices . Regardless of the macroeconomic situation, it would be best if institutional investors decided to invest in Bitcoin and funds flowed in through Bitcoin spot exchange-traded funds (ETFs) , but there is no particular momentum in that regard yet.
In this atmosphere, there were also altcoins that showed unique increases. MOODENG, a meme coin based on Solana's hippopotamus character that has been receiving the most attention recently, saw its price surge 30% on the day of the Iranian missile launch . Of course, given the nature of meme coins, it seems unlikely that the increase will continue for a long time.
Solana-based meme coin POPCAT also saw a significant increase last week, hitting a new high. In addition, FTT, the FTX exchange token, saw a price surge of nearly 95% over the past week, which is more than most of the top 100 cryptocurrencies by market cap. The recent report that FTX’s general bondholders are facing an imminent bond issue is believed to be the reason for FTT’s rise.
Markets Rising with Anxiety… When Will Israel Strike Back at Iran?
First of all, today (the 7th) marks the first anniversary of the Middle East conflict between Israel and Hamas. It would be good to pay attention to the fact that on this day, there may be an important message that indicates a missile counterattack by Israel or an escalation of the Middle East conflict.
The September FOMC minutes will be released at dawn on the 10th (Thursday). In fact, the September FOMC content has already been known to some extent through Fed doctors and Fed Chairman Jerome Powell, but if unexpected content is released, the market may feel uneasy. At 9:30 PM that night, the US Consumer Price Index (CPI) and the number of new unemployment benefit claims will be released. It is expected that there will be no sudden events that will cause problems with prices, but the number of unemployment benefit claims needs to be paid attention to. Finally, the US Producer Price Index (PPI) will be released on the night of the 11th (Friday).
As for major speeches, it is worth paying attention to the public speech of Michelle Bowman, a member of the US FOMC and Federal Reserve Board, scheduled for the early morning of the 8th (Tuesday) and the early morning of the 12th (Saturday). She is the only person who advocated a 25bp rate cut at the September FOMC. She is likely to say something along the lines of, "I was right." If the market is convinced by her words, an atmosphere of expecting a rate freeze in November may be formed. Of course, this will not be a good trend for Bitcoin prices.
There are a series of unexpected situations that are difficult to predict even an inch ahead. In times like these, I think it would be helpful to have a conservative approach while managing your weight. Then, I hope that our readers will have successful investments this week as well.
