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Crypto Market Remains Well Bid For Risk Assets
The crypto market’s response to geopolitical tensions has been intriguing. Despite Iran launching over 180 missiles toward Israel, the sell-off in traditional financial assets was relatively muted. The S&P 500 saw a modest decline of 1%, while U.S. benchmark West Texas Intermediate (WTI) oil prices rose by 2%.
In stark contrast, the digital assets market faced a more severe impact, with Bitcoin (BTC) experiencing a significant dip of over 5% following Iran’s assault. The total crypto market capitalization eroded by over 6%, and liquidations surpassed $550 million within the past 24 hours, as reported by CoinGlass.
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QCP Capital highlights that the premier cryptocurrency seems to have established a solid support level at $60,000. However, the firm advises caution, noting that further escalation in the Middle East might drive BTC down to $55,000. Reflecting on the recent market dynamics, the trading firm commented:
“Middle East geopolitics will steal the limelight for now, but the shallow sell-off suggests that the market remains well bid for risk assets. This minor setback shouldn’t distract from the bigger picture.”
Global Economic Policies and Crypto Markets
The report also drew parallels between China’s recent economic policy actions and those of Japan in the 1990s. Notably, the Bank of Japan (BoJ) addressed deflation by reducing interest rates, introducing negative interest rates, and initiating a quantitative easing program. The report further elaborated:
“The flush of liquidity from the PBoC and potential fiscal support will likely bolster asset prices in China, with bullish sentiment potentially spilling over globally to support risk assets, including crypto.”
Moreover, the report highlighted US Federal Reserve (Fed) Chair Jerome Powell’s recent dovish remarks at the National Association for Business Economics, signaling potential further interest rate cuts in 2024. For context, the Fed had cut rates for the first time in four years on September 18. Subsequently, financial markets worldwide experienced a surge in the price of risk-on assets, such as stocks and cryptocurrencies.
In conclusion, the report expressed optimism that “asset prices are expected to remain supported heading into 2025,” buoyed by aggressive interest rate cuts by both the largest (Fed) and third-largest (People’s Bank of China) central banks in the world.
What To Expect From Bitcoin In Q4 2024?
Despite the direct impact of the Iran-Israel conflict on BTC’s price, crypto analysts maintain a positive outlook for a potentially robust Q4 2024. One analyst suggested that the recent dip might represent BTC’s “quarterly low.”
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Another crypto analyst, Eric Crown, posited that BTC could reach a new all-time high (ATH) in Q4 2024, basing his analysis on the cryptocurrency’s historical performance in the months following September. As of the latest data, Bitcoin is trading at $61,992, reflecting a slight decrease of 1.2% over the last 24 hours.
While the market experiences fluctuations, BTC is demonstrating resilience, rebounding slightly after three consecutive red candles on the daily chart.
