Amidst escalating geopolitical tensions, Bitcoin initially plummeted but recovered over 6% to trade around $62,160. Despite Israeli airstrikes on Iran and retaliatory drone and rocket barrages, Bitcoin found support amid reports of safe nuclear facilities in Isfahan. However, ongoing violence and halving-related supply concerns could impact crypto sentiment.
Bitcoin Rebounds Amidst Geopolitical Tensions, Halving Event Overshadowed
Singapore, March 10, 2023 - Bitcoin experienced a partial recovery after a steep decline triggered by escalating geopolitical tensions between Israel and Iran. The digital asset initially plummeted by over 6% on Friday, reaching a low of $59,643, but subsequently stabilized and currently trades at approximately $62,160. Other cryptocurrencies, including Ether, Solana, and Dogecoin, also exhibited signs of recovery.
The market turmoil was sparked by Israel's retaliatory strike on Iran, following Tehran's earlier rocket and drone barrage. Reports that nuclear facilities in Isfahan, Iran, remained intact provided some relief, leading to a moderation in risk appetite. Traditional safe-haven assets such as bonds, gold, and the US dollar experienced slight declines, while stocks and US equity futures rebounded from session lows.
The ongoing Middle East conflict has cast a shadow over the highly anticipated Bitcoin halving event, scheduled for later Friday. Historically, halvings, which reduce the issuance of new tokens, have been associated with price increases for the largest cryptocurrency. However, Bitcoin reached a record high in mid-March, raising questions about whether the potential impact of this halving has already been reflected in its market valuation.
Analysts remain cautious about the potential impact of the Israel-Iran conflict on cryptocurrency markets. "The ongoing violence could create a general risk-off sentiment across crypto," said Stefan von Haenisch, head of trading at OSL SG Pte. "However, it would likely take a significant decline to fully offset the bullishness surrounding the halving."
Strategists from JPMorgan Chase & Co. and Deutsche Bank AG have suggested that the quadrennial halving is largely priced in by investors. In the United States, three-month-old spot-Bitcoin exchange-traded funds have experienced a series of net outflows in the run-up to the event, indicating a shift towards risk aversion.
As the geopolitical situation remains fluid, market participants will continue to monitor developments closely. The halving event, while historically bullish for Bitcoin, may face headwinds from the current global uncertainty.
