- Bitcoin is proving once again it is not a haven from geopolitical stress.
- Fear returns to a crypto market that was posting all-time highs.
The price of Bitcoin will drop to levels not seen for almost two months if the conflict between Iran and Israel escalates, one trader warns.
A worsening situation in the Middle East could see the price of Bitcoin drop to around the $58,000 mark, according to Jonathan de Wet, chief investment officer at digital asset trading firm Zerocap.
“The wildcard is Israel’s response to the Iranian attack. Markets want to see stability here,” de Wet told DL News.
Bitcoin would still be up 37% for the year in the event of such a swoon. But the possibility the Middle East is sliding into a regional war will undermine confidence further across equities, crypto, and other capital markets.
A bout of bearishness
Last week, investors pulled $85 million from US spot Bitcoin exchange-traded funds. It was a sharp U-turn from the prior week when net inflows totalled about $484 million.
Bitcoin’s value took a hit over the weekend, posting a 13% decline from its Friday afternoon high.
Pessimism also drove price declines in both Ethereum and other cryptocurrencies over the weekend, while haven assets such as gold spiked.
To be sure, the upcoming halving and continuous bullishness about Bitcoin ETFs could sooth the market, helping it avoid wilder swings, analysts say.
“If we get moderation in geopolitical risk, I think the ETF flows [will] buoy prices,” de Wet said, forecasting prices to hold above $60,000 should tensions subside.
Bitcoin last traded at around $58,000 on February 28, according to CoinGecko.
Hong Kong ETF
In a more bullish sign, Hong Kong’s securities regulator approved applications for several spot Bitcoin and Ether ETFs on Monday.
The funds will allow investors in Mainland China to access Bitcoin in a regulated way, which is a big deal according to de Wet.
“With China’s slowdown in property and the yuan, investors will be looking for alternatives,” de Wet said. “Given the potential impact, we are underpriced at these levels.”
Still, Hong Kong’s market is “tiny” compared to overseas markets, with a value of just $50 billion, according to Bloomberg Intelligence analyst Eric Bulchunas.
“Don’t expect a lot of flows. I saw one estimate of $25 billion. That’s insane. We think they’ll be lucky to get $500 million,” Bulchunas wrote in a post on X.
Milder dips
Conditions have changed compared to previous bull cycles, which regularly saw 25% price dips amid cycle peaks, digital asset trading firm Wintermute wrote in a report on Monday.
“Bitcoin will likely continue to experience a relatively milder drop than before due to sustained buying pressure spurred by the demand for US Spot ETFs,” Wintermute said.
Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.
