What does the price of bitcoin have to do with the attack on Israel?

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Key facts: Bitcoin is approaching $60,000, a price not seen since early March. A bearish correction does not equal a crypto winter. Bitcoin (BTC) leads more than 7% drop in the last 24 hours. The reason, as BitcoinDynamic explained, is the escalation in the war conflict in the Middle East. Today, April 13, Israel claimed to have received air strikes from Iran. The following chart, provided by TradingView, shows the price of bitcoin over the last month:

Bitcoin price for the last 30 days. Source: TradingView. To understand the relationship between one thing and the other, you have to understand that Bitcoin, like other financial assets, does not operate in a vacuum.. It is affected by a variety of global macroeconomic factors. Among these factors, war conflicts occupy a preeminent position due to its immediate impact on investors' perception of risk. When a situation like the current military escalation between Israel and Iran arises, it creates an atmosphere of global uncertainty and fear.

Investors, in times of war tension, tend to be more cautious. Their risk aversion grows and, consequently, many choose to stay away from assets considered risky. Bitcoin, despite its growing popularity as a store of value and digital gold, is still viewed by many in the financial market as a high-risk asset. This is due to its historical volatility and relative youth. Financial analyst, Fawad Razaqzada, commented on Friday:

«The appetite for risk went off the menu this Friday, after the news broke that Israel would suffer a direct attack from Iran. According to Bloomberg, this could happen as early as Saturday. «So, investors reduced their exposure heading into the weekend, fearing that risk assets would collapse in case something happens during this period.» Fawad Razaqzada, financial analyst.

The decision of investors to withdraw their capital from assets such as BTC in times of crisis leads to an increase in the supply of the asset in the market, without a corresponding increase in demand, resulting in a fall in its price. This is a direct reflection of the law of supply and demand, a fundamental economic principle that affects all financial markets.

A correction is not a crypto winter

Although this outlook may seem discouraging for bitcoin investors, it should be taken into account that in the medium and long term, bullish expectations remain in full force.

Bitcoin has both intrinsic and extrinsic bullish fundamental factors. Among them can be mentioned the fact that the approval of bitcoin ETFs in Hong Kong would be imminent – ​​according to several sources. This is one of the 5 largest financial markets in the world, so the impact of such a measure would be very important (in addition to the fact that it could influence the Chinese government to relax restrictions on the use of digital assets). On the other hand, at the end of next week, a new bitcoin halving will occur, an event that reduces the issuance of BTC per mined block by half. Each halving reminds the market that bitcoin is a scarce asset and that there will be less and less available for acquisition, which has always worked as a bullish catalyst for its price in the medium and long term. Knowing this, many consider that bitcoin's bearish corrections, far from being something regrettable, are a good opportunity to accumulate more BTC.