A week ago, Bitcoin was trading around $69,000, while at the time of writing it trades in and around the range of $61,000-62,000. The significant drop is attributed to Iran's attack on Israel on Saturday 13.04. and the fear of a new global conflict. The question thus becomes what the way forward looks like with a macro picture that consists of interest rates that will most likely remain higher for longer and a greater degree of international unrest.
NBX maintains its position as the best crypto exchange in the Nordics when it comes to AML.
On Saturday evening, European time, several media outlets reported that Iran had sent drones and missiles out of its own territory with Israel as the target. Pictures and videos of the airstrike immediately began to circulate. The crypto market, which is open around the clock, immediately felt the fear of investors. According to Coinmarketcap, on Saturday at 21:40 (CET +1), the Bitcoin price was $67,132. Half an hour later, Bitcoin was priced at $61,710 - a spectacular price drop in just under half an hour. Bitcoin has since then climbed back up, but has not been able to get above the level before the fall. As this is being written, Bitcoin is dangerously close to falling below $61,000 again. We will not speculate on how the situation in the Middle East could develop further, but it goes without saying that if one thing leads to another, it most certainly will result in a higher degree of volatility for Bitcoin and cryptocurrencies in general.
The dramatic event on Saturday came on top of the bad macro news that we wrote about last Thursday - where it looks like interest rates in the US will not be cut anytime soon. On Tuesday, FED chair Jerome Powell went to great lengths to confirm this by stating, among other things: "Right now, given the strength of the labor market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us.”.
The statements stand in stark contrast to what Jerome Powell said a little over a month ago: "We’re waiting to become more confident that inflation is moving sustainably at 2%. When we do get that confidence, and we’re not far from it, it’ll be appropriate to begin to dial back the level of restriction (read: lowering the interest rate ).". At the start of the year, market players predicted anywhere from 4-6 interest rate cuts this year and that we already would have seen one in the US. However, with the current outlook, Americans may very well go on summer vacation without having received a single one.
As for the spot Bitcoin ETFs, the cumulative flow has been negative for the past four trading days, resulting in a net outflow of a total of $314.8 million over four days, according to Farside.
Despite the comprehensive economic context, the unfavorable ETF flows, and the ensuing downward price trajectory for Bitcoin, it is of significance to note that the Bitcoin halving event is imminent and will most likely happen tomorrow. From a historical perspective, this event has held substantial importance for Bitcoin when viewed through a long-term lens.
This text is intended to inform and is not an investment recommendation.
Best regards,
Adam Jakobsen.
NBX.
