In days when the upcoming Bitcoin halving is expected to be the most crucial crypto topic, all eyes of Web3 investors are directed elsewhere. Of course, we mean the conflict between Iran and Israel. A few days ago, Iran launched around 300 missiles toward Israel. The moment that news was announced, the value of all cryptocurrencies drastically dropped. This is not the first time the crypto world has reacted like this. Let’s see what influenced crypto prices.
Impact of the Iran – Israel conflict on the crypto world
Last week, news came out on Twitter that Iran had fired over 300 missiles at Israel. Then, shortly after that, the value of all cryptocurrencies began to drop drastically. The price of Bitcoin fell from then $67,000 to just over $60,000 within a few minutes, which is almost 12%. Of course, as history has shown us countless times, such a drop in Bitcoin led to the collapse of the entire crypto market. Of course, altcoins suffered the most. The average drop was over 25%. The meme tokens and “smaller” projects experienced the most significant declines, some even up to 50%. Additionally, it should be noted that Ethereum, as the second-largest cryptocurrency in the world, experienced a correction of up to 20%. Its price dropped from $3,500 to $2,900 at one point.
What History Has Taught Us?
It is known that during times of war, commodities such as gold and oil drastically increase in value. It naturally leads to high inflation. High inflation, in turn, implies that there will be no interest rate cuts. That further affects the stock and crypto markets. Some even believe that this crash was preplanned, considering that Iran informed its allies about the attack. This would mean many were prepared for this crash and waited for the weekend to bring down the market during low trading volumes. However, these are just theories. Still, once again, it has been shown that high leverage should be avoided. Last weekend, $855,000,000 worth of liquidations occurred in the crypto market.
What is particularly interesting and distinguishes this crypto crash from previous ones is that Bitcoin recovered quickly. This demonstrates the significance of entering the most crucial cryptocurrency into “Wall Street.” Undoubtedly, traders from Wall Street see every new dump as an opportunity to buy at a cheaper price. However, many predict that we will face a new decline soon.
Finally, it must be noted that Bitcoin dominance increased from 51% to a whopping 54%. It indicates that people were not exiting crypto. Instead, they transferred the value of their altcoins into the most reliable currency, Bitcoin, which by default always experiences a minor price oscillation.
The New Period Starts with Positive News
The past seven days have been the best example of how different news affects the crypto market. At the time of writing this text (Monday, April 15, 2024, around 10:00 AM Central European Time), while many are anticipating a new drop in the crypto market after the opening of US exchanges, long-awaited positive news about the approval of BTC and ETH ETFs in Hong Kong has emerged on Twitter. Anyone familiar with stock trading knows how significant this news is. Especially given the size and strength of markets like China’s, which will positively impact crypto.
Naturally, the crypto market reacted positively. Bitcoin returned to $66,000, while ETH rose to $3,244. However, we still have to see if the opening of exchanges will lead to new price fluctuations in cryptocurrencies.
The History of BTC Decline Depending on Events
The history of Bitcoin’s decline depends on various events. One of the most significant events that led to a sharp drop in the price of Bitcoin was the COVID-19 pandemic. This global health crisis caused widespread panic in financial markets, including cryptocurrency. Additionally, geopolitical tensions and armed conflicts, such as the conflict between Ukraine and Russia, have sometimes contributed to Bitcoin’s price decline.
On the other hand, positive developments such as regulatory approvals for Bitcoin-related financial products like ETFs or widespread adoption of Bitcoin as a payment method by companies and institutions have historically led to price increases. Additionally, events highlighting Bitcoin’s utility as a hedge against inflation or geopolitical uncertainty have often boosted its value.
Conclusion
However, in moments when the entire market is falling, most investors tend to think pessimistically. It is essential to note that throughout history, every market correction caused by war and similar external influences has eventually led to significant growth in crypto. We believe it will be the same this time.
No person feels comfortable when they see the value of their portfolio decrease by 20% in a matter of hours. In such situations, there is one rule. If you have additional funds in USDT, take advantage of this correction and buy more currencies. If you don’t have additional funds, relax and wait for the upcoming Bull market. And if this drop has caused you stress and nervousness, it means you have violated the basic rule of investing in the crypto market. Never invest more than you can afford to lose.
Disclaimer: This text does not provide any financial instructions but offers an analysis of current events in the crypto market. Investing in cryptocurrencies carries significant risks. The values of these tokens are subject to significant changes and external factors. Therefore, we advise you to only invest what you are willing to lose, to conduct your research, and to consult with financial experts before making any financial decisions.
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FAQ
Is Bitcoin a Good Investment?
Bitcoin is the first and most prominent cryptocurrency. Originally conceived as a method of payment, it has become very popular and proven itself as a quality investment asset. However, the price of Bitcoin has been highly volatile throughout its history, which entails significant financial risk. If you are willing to invest money in cryptocurrencies, Bitcoin is the safest option.
What is halving?
The halving is the most significant event in the crypto world when the reward for mining new Bitcoin blocks is halved. This means the number of new bitcoins awarded to miners for each successfully mined block is reduced by half. This process occurs approximately every four years and significantly impacts the supply and demand of Bitcoin, which can affect the price of this cryptocurrency.
What is the best centralized cryptocurrency exchange?
The answer to this question varies from person to person because the best cryptocurrency exchange for someone may be the one that supports their desired currency, while for other users, entirely different factors such as security, ease of use, deposit methods, and many others may be important.
What is Bitcoin dominance?
Bitcoin dominance is a term used in the crypto world to describe the proportion of Bitcoin in the total market capitalization of cryptocurrencies. It represents the percentage of the total market value of Bitcoin’s cryptocurrency market. For example, if Bitcoin’s dominance is 55%, it means that Bitcoin accounts for 55% of the total market value of cryptocurrencies.
What is Bitcoin ETF?
A Bitcoin ETF (Exchange-Traded Fund) is an investment fund traded on an exchange, designed to track the price of Bitcoin or provide exposure to Bitcoin without the need for investors to own the cryptocurrency directly. This financial product enables investors to trade Bitcoin in traditional financial markets using their regular brokerage accounts without opening unique digital wallets or crypto exchanges.
