On Tuesday, bitcoin (btc) fell below the critical threshold of $63,000, reflecting a broader decline in the cryptocurrency market, which has lost nearly $200 billion in total. market capitalization during the weekend.
This drop follows bitcoin's recent two-month peak of $66,500, reached last Friday, which had ignited bullish sentiment among investors looking forward to the final quarter of the year. However, a series of geopolitical developmentsparticularly rising tensions in the Middle East, may test the resilience of risk assets like bitcoin.
bitcoin under pressure as investors sell gold
Markets expert Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, x.com/jsblokland/status/1841112732935897457″ target=”_blank” rel=”noopener nofollow”>noted that global investors are increasingly selling bitcoin to buy gold, a trend evident in the BTG chart below, considered a major contributing factor to the recent bitcoin price correction.
Blokland connects the cryptocurrency struggles to escalating tensions between Iran and Israel, which have intensified over the past month. The situation has raised concerns about investor confidence, as gold It is a historically stable asset that can hedge against volatility in the digital currency market.
The situation worsened further on Tuesday when missiles were launched reportedly launched from Iran towards Israel, prompting urgent warnings from the White House. Officials indicated that Iran was preparing for a possible ballistic missile attack on Israel, raising fears of a broader conflict in the region.
The White House has stated that it actively supports Israel's defensive preparations and warned of serious consequences for Iran in the event of a military attack.
Historically, bitcoin has been referred to as “digital gold,” but with continued economic uncertainties coupled with geopolitical unrest, fears of a global recession large loom This volatility may lead investors to seek refuge in more stable assets, contributing to bitcoin's downward pressure.
Analysts warn of overbought conditions
Analysts have also expressed concern about the situation of bitcoin. overbought conditions after the increase of almost 5% in the week prior to September 27. This increase coincided with a significant increase in net inflows into global crypto exchange-traded products (ETPs), reaching their highest levels since mid-July.
Last week, the combined net purchasing volume of US bitcoin exchange-traded funds (ETFs) amounted to 16,774 btc, surpassing the typical one-month supply of newly mined bitcoin, which amounts to about 13,500 btc.
However, this bullish sentiment faced a reality check on Monday when Federal Reserve (Fed) Chairman Jerome Powell warned investors during mid-afternoon trading.
crypto-market-today.html” target=”_blank” rel=”noopener nofollow”>According Speaking to CNBC, Powell indicated that the central bank is not following a predetermined path as further rate cuts are on the horizon. This statement generated a feeling of caution among investors, perhaps contributing to the recent pullback of the largest cryptocurrency on the market.
At the time of writing, btc is trading at $62,130, a drop of over 2% in the last 24 hours.
Featured image of DALL-E, chart from TradingView.com
