Israel-Iran Conflict Could Push Bitcoin to $55,000!

The conflict between Israel and Iran, reignited by a series of military attacks, is shaking the region and global markets, particularly the crypto market. In a context where volatility is often the key word, Bitcoin seems to be more sensitive than ever to geopolitical events, with a new drop of 4 %, attracting the attention of investors worldwide.

The immediate impact of the geopolitical crisis on Bitcoin

The new Israeli attacks on Lebanon and the Iranian response with more than 180 missiles did not leave the crypto market indifferent. After breaking the $62,000 mark, Bitcoin suffered a 4 % drop on October 4, 2024, and fell to $60,282, before rebounding above this threshold to climb above $62,000 again on October 6. Indeed, these tensions could lead to an even more substantial decline, with forecasts indicating a possible plunge towards $55,000. Thus, the increased sensitivity of cryptos to geopolitical events, compared to traditional markets, has manifested once again, while stock markets like the S&P 500 have only retreated by 1 %.

Investors agree that the extent of the crypto decline far exceeds that of traditional markets. While WTI crude oil prices have slightly increased by 2 %, Bitcoin has demonstrated its vulnerability to international crises.

A long-term view, despite the turbulence

Despite this decline, the long-term outlook seems more promising for Bitcoin. The U.S. Federal Reserve (Fed) has hinted that interest rates will remain low in 2024, thus creating a favorable environment for risky assets like cryptos. Therefore, accommodative monetary policies from the Fed and the People’s Bank of China could well support Bitcoin until 2025, as these two economic powers continue to stimulate global liquidity.

Moreover, the $6 billion expected in repayments to FTX customers should also contribute to an improvement in market liquidity. This potential capital injection could offer a respite to Bitcoin and other cryptos, as investors might choose to reinvest these funds into these assets. When combined with the historical impact of U.S. presidential elections, often followed by a rise in Bitcoin prices, the prospects for the flagship crypto remain optimistic.

Despite the immediate volatility caused by the geopolitical conflict, Bitcoin’s long-term trajectory still seems promising, driven by favorable global monetary policies and expected liquidity injections. Nevertheless, developments on the Israeli-Iranian front may continue to shake markets in the short term. Bitcoin remains an intrinsically volatile asset, but global economic fundamentals could well work in its favor in the coming months.