Cryptocurrency Market Tumbles as Middle East Tensions Escalate
A drop of 11% in Bitcoin has taken place in the past 24 hours, especially in Ether, which declined steeply by 21%, leading to an overall sinking value in the crypto selloff by about $270 billion, according to CoinGecko.
The crypto selloff coincided with the fall in the Asian-Pacific market equities and the Big Tech companies drop in stock value. The fall in the stocks of big tech companies on Nasdaq has slipped by 3.4% over the past two weeks, the most significant decline compared to the past two years since September 2022.
Such declines affected Amazon, Nvidia, Apple, Microsoft, Alphabet-Google, and others. As of today, Bitcoin reached its lowest level since February of 2024, although it was said that back in July, Ethereum and Dogecoin would spark up, that was not the case.
Reasons Over Reasons for Crypto Selloff
As one grows older, life gets more complicated, but one thing that doesn’t change is the consequential relation between global events and the fragility of the stock market, and more dangerously the fragility of a non-tangible market, such as cryptocurrency and the crypto selloff.
Cryptocurrencies have causal relationships with different currency inflations, particularly the US dollar. During the Covid-19 pandemic, we saw the very earliest signs of the dollar losing a fragment of its power. This has resulted, in response, to a more favorable view and shift towards the new digital tokens on the block, cryptocurrencies. This created a whole new meaning of the blockchain technology’s advantages and contributed to the increasing significance of the non-tangible digital currencies’ market. and a crypto selloff.
Middle East Escalations Playing Theirs Cards
Another reason behind the dramatic decline is the Middle East.
The main focus of the US now is on the Israeli war in Palestine with the US focusing on different manners to protect its golden child. Experts believe such protection is jeopardizing the US economy, causing more pressure on the US Treasury and leading to a decline in the US dollar. External factors, such as Israel risking a regional war in the Middle East with its actions in Palestine and Lebanon, cause pressure on the US. The US must intervene and “save the day” like in Hollywood movies, but in real life, they don’t realize how this is deteriorating their economy.
The US economy has been suffering for quite some time now, and knowing this, we should keep in mind that the US dollar backs cryptocurrency, gold, oil, and everything else. When the currency deteriorates, everything backed by it will decline which led to a crypto selloff. The steep decline in the stocks of big tech companies two weeks ago is a prime example. Today, the drop has reached crypto, and since crypto isn’t tangible, it is weaker than gold and oil.
The war in the Middle East could initiate conflicts between other countries, such as China, Russia, and the US, due to the geopolitical tensions. These factors are interrelated to the power of the US dollar and crypto. For investors, the safest move is to withdraw investments from crypto and invest in tangible assets such as US bonds, which is causing a bigger crypto selloff.
At the end of the day, staying in your lane will help you reach your destination safely with minimal setbacks along the way.
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