Bitcoin Declines Amid Middle East Geopolitical Risks
On Tuesday night, Cryptocurrencies faced a fall down after bitcoin dropping back to the $60,000 level following the geopolitical risks in the Middle East.
October is usually considered Bitcoin’s strongest month, however, the equation flipped back this time leaving the crypto by nearly 4% at $60,972.62, according to Coin Metrics.
Stocks related to virtual currencies also fell in extended trading, according to CNBC news. Crypto exchange Coinbase fell about 1%, and bitcoin proxy MicroStrategy lost 2% after they closed lower by 7.4% and 3.5%, respectively.
Bitcoin and Geopolitical Tensions
The rising geopolitical risks in the Middle East region after Iran launching missile attack on Israel Tuesday night of reduced investor’s risk appetite as the new trading month and quarter started.
“Surging unrest across the Middle East has propelled oil prices upward and reinforced the dollar’s strength, casting a shadow over bitcoin and other speculative investments,” said Chris Kline, chief operating officer and co-founder of Bitcoin IRA.
“In stark contrast to September’s stronger-than-expected performance for bitcoin, October looms as a potential rollercoaster, influenced by the delayed ripple effects of last spring’s halving event and the approach of a divisive American electoral contest,” he added. “Meanwhile, a global monetary tug-of-war is unfolding as various central banks slash interest rates and expand their money supplies.”
Many were pretty optimistic for the months of October and November, as this period of the year has usually been the strongest Bitcoin. Since 2013, it has ended the month higher in all but two years, with an average return of nearly 23%. To crypto-native investors, it has become known as “Uptober”
Bitcoin still wasn’t able to break above $70,000 while the $55,000 level has proved very tough support for the digital asset. A section of investors doubts whether this can be the month of revival, but most are still confident that the virtual currency will test new highs in the new quarter.
Final Thoughts
The immediate aftermath of the geopolitical risks affected negatively the bitcoin, which challenges the narrative of cryptocurrencies. Despite the fact that some experts argued that Bitcoin’s decentralized natures make it an ideal border against geopolitical risks challenges, its recent performance proved the opposite.
On the other hand, André Dragosch, European head of research at Bitwise, claimed that Bitcoin has the immunity to survive geopolitical risks. “Geopolitical news should generally be faded,” Dragosch noted, implying that the current market reaction might be exaggerated.
The leading cryptocurrency market will now go through a well-due test on the back of rising geopolitical tensions within the Middle East. Increased scrutiny is expected by regulators, especially with regards to the use of crypto for sanction evasion and other illicit transactions, which will likely rework institutional perception about digital assets as a credible investment class.
In fact, greater oversight may prevent some areas of adoption in the short term, while enabling the longer-term evolution of blockchain technology. Innovations could provide increased financial sovereignty and additional protection from global disruptions, now positioning cryptocurrencies as both a tool for empowerment and a response to shifting geopolitical dynamics.
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