Altcoins
Cryptocurrency Prices Fall as Geopolitics Trigger Risk Absence
Last updated: April 12, 2024, 5:03 p.m. EDT | 3 minutes of reading
Cryptocurrency prices fell on Friday as growing tensions in the Middle East triggered risk-free panic selling in financial markets, with Bitcoin (BTC) losing 5% in the past 24 hours to fall below of $67,000, and Ether (ETH) falling 9% to the $3,200 zone. .
Israel prepares for a counterattack of Iran after recently eliminating the IRGC military leaders in Syria. Reports were released on Friday that The United States is moving its warships to prepare to defend Israel.
🚨🇺🇸🇮🇱 JUST IN: The United States has pledged to DEFEND ISRAEL if Iran attacks. Iran said this would make the United States a target for Iran. pic.twitter.com/Esn0bPXWFX
– Jackson Hinkle 🇺🇸 (@jacksonhinklle) April 12, 2024
Tensions have been high in the Middle East since Hamas’ attack on Israel on October 7 and Israel’s devastating counterattack on Gaza.
Growing fears that the United States and Iran could find themselves engaged in a hot war dented sentiment on Friday.
The S&P 500 hit its lowest level in nearly a month just above 5,100, falling 1.4% on the day.
Safe havens like the US dollar and gold are both surging. The DXY rebounded above 106 for the first time last November, while gold briefly hit record highs above $2,400.
It is therefore not surprising that cryptocurrency prices have been under pressure – many investors believe cryptocurrencies as a high beta risk asset.
Altcoins bear the brunt of falling cryptocurrency prices
Friday’s sale at Bitcoin was decidedly soft compared to that of many major altcoins.
According to CoinMarketCapthe tastes of Solana, XRP, Dogecoin, Toncoin, Cardano And avalanche all fell between 10 and 16% in 24 hours.
dog hat, Bonk And Arbitration were among the worst-performing names in the top 100 by market capitalization.
Friday’s carnage saw open interest in altcoin cryptocurrencies reduced by 30%.
Altcoins lost around $6 billion in open interest.
30% drop in total open interest.
Massacre.
🩸
– Zaheer (@SplitCapital) April 12, 2024
This comes after $770 million in leveraged long positions in crypto futures were wiped out on Friday, according to Data from coinglass.com.
Most of the aforementioned altcoins are down at least 25% from recent highs.
Some, like Arbitrum and Bonk, are down more than 50% from yearly highs.
Indeed, it had already been a difficult few weeks for most alternative cryptocurrency prices, even before Friday’s peak.
After a strong end to 2023/early 2024, which saw many major altcoins post gains of 2-3x or more, as well as Bitcoin After hitting new records, the momentum stopped and profit taking took over.
I’m nervous about a Bitcoin halved associated turbulence, Fed rate cut bets fade and geopolitics has added new reasons to take risks.
What’s Next for Cryptocurrency Prices?
It is still far too early to say with certainty that the latest drop in cryptocurrency prices is over.
After all, there is still plenty of room for escalation between Iran and Israel.
THE altcoin The pullback presents a great opportunity for investors to access bargain prices compared to a few weeks ago.
But anyone entering the market now should prepare for significant volatility in both directions.
Or, if they want to buy a crypto that carries a much lower risk of short-term intraday movements of 15%, there is Bitcoin.
Yes, Bitcoin fell 5% in 24 hours due to risk-free flows. But trading around $67,000, BTC is down just 8% from the record highs it hit near $74,000 last month.
Additionally, it remains well locked in recent ranges.
This could reflect the fact that many view Bitcoin as a safe haven, much like gold.
And its general resilience in recent weeks could reflect a reluctance to sell before the halving/mid ETF Optimism.
Although a “sell of the fact” reaction after the halving could see Bitcoin fall back towards $60,000, its outlook remains strong.
Previous halvings have typically been followed by huge price increases to new record highs within a few months.
The size of the US deficit and the easing of global central banks suggest that the macroeconomic situation will remain favorable. And this, even if the Fed is relatively slow to start reducing its rates, amid robust American data.
Finally, institutional demand for spot Bitcoin ETFs has added a new source of long-term buying pressure to the market.
$100,000 in Bitcoin for later this year remains very possible.
And that suggests that while the near-term outlook for the altcoin is volatile, traders should prepare for a strong comeback later this year.
Warning: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose your entire capital.