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Several traders speaking to CoinDesk stated that the ongoing tension in the Middle East may spread to crypto markets and risk assets such as bitcoin (BTC) may decline for a short time. The conflict between the Palestinian political and militant organization Hamas and Israel has reached its fourth day as of today. “The global market is concerned that the conflict could spread to nearby oil-producing countries, so investors are quite hesitant,” Greta Yuan, head of research at digital asset platform VDX, said in an email to CoinDesk. “Spot gold increased by around 1 percent as conditions worsened and market risk aversion increased.”
Crypto markets had fallen 2 percent at the start of the week on fears that rising oil prices and turmoil could impact international trade. Futures investors betting on higher prices saw over $100 million liquidated in a 24-hour period starting Monday as selling pressure built up in altcoins. Still, crypto markets are showing early signs of resilience, which could instill confidence in bulls. “We observed a temporary decline in the price of bitcoin following the shocking news of the conflict, but the price has stabilized again,” said Jeff Mei, COO of crypto exchange BTSE. “Cryptoassets have shown resilience in the face of increasing geopolitical turmoil.” In early 2022, tensions between Russia and Ukraine caused bitcoin to fall as much as 7 percent in a single day.
Now, some traders are recommending that investors pay attention to oil and energy market changes to predict what action Bitcoin will take. “If we look at macroeconomic impacts, we have to pay attention to energy prices,” FxPro senior market analyst Alex Kuptsikevich tells CoinDesk. Rising oil prices could trigger a selloff in stocks, leading to tighter monetary policy. “This is one of the biggest risks for risk assets such as bitcoin.”