Bitcoin Surges Amid Middle East Conflict
Two weeks into the ongoing war in the Middle East, Bitcoin has exceeded its initial value at the conflict’s onset.
On Saturday morning, the largest cryptocurrency was trading at $71,000, reflecting a 0.7% dip within the last 24 hours following a U.S. airstrike on a military target on Kharg Island, which is Iran’s primary oil export hub. While the drop from Friday’s peak of $73,838 was noticeable, it wasn’t excessively drastic. Bitcoin managed a recovery of 3.5% despite the news.
Looking at the week as a whole, the data illustrates resilience. Over the past week, Bitcoin gained 4.2%. Ether climbed by 5.5% to reach $2,090, while Dogecoin increased by 5%. Solana saw a 4.2% rise to $88, and BNB went up by 4.5% to $655. Despite the escalating war situation, all major cryptocurrencies have shown positive trends this week.
The markets seem to be adapting to the ongoing conflict in real time. Initially, during the war’s early days, the unpredictable risks led to significant fluctuations with each news update. Now, traders have developed a more robust framework to adjust to events like military strikes or market dips.
This emerging pattern indicates a waning tendency to react impulsively to news headlines. Still, Bitcoin remains challenged by the $73,000-$74,000 resistance level, which has thwarted its attempts at this mark for the fourth time recently.
New statements from former President Trump regarding Kharg Island have introduced additional complexity to market dynamics. In a post on Truth Social late Friday, he mentioned he would protect oil infrastructure “for common sense reasons,” but would “reconsider immediately” if Iran continued to obstruct the Strait of Hormuz.
In response, Iran has threatened retaliatory actions against U.S.-affiliated facilities in the region if strikes on their energy infrastructure persist. This represents an escalation that wasn’t present just 48 hours earlier. Such developments could significantly worsen what the IEA has labeled the largest supply disruption ever.
In the short-term market context, liquidation figures have reached $371 million. The latest trading session revealed that short liquidations surpassed long positions, with a difference of $207 million versus $163 million, indicating that the initial rise to $73,800 pressured the bearish traders before subsequent headlines affected newly invested long positions.
Looking ahead, all attention is directed toward the Fed meeting on March 17-18. With oil prices surpassing $100 and a notable energy supply disruption ongoing, claims of stagflation are becoming increasingly difficult to overlook.
The CME FedWatch indicates over a 95% chance of a 3.5% to 3.75% hold, but the upcoming dot plot and comments from Powell may prove to be more consequential than the decision itself. Any indication that rate hikes could be back on the agenda would likely be a significant setback for risk assets, including the cryptocurrency market, which has spent months anticipating a different outcome.
