Bitcoin, the world’s leading cryptocurrency, suffered a notable plunge in price in the first three days of October. This slip is due to geopolitical tensions in the Middle East, which have sparked global market concerns.
Geopolitical Instability and Bitcoin Liquidation Trend
According to data, Bitcoin’s price has dropped by 0.67% within 24 hours to $60,572.10. However, this 1% slip does not reflect the massive loss the digital asset has recorded thus far this month. A closer look at the price of BTC reveals an approximate 5% downward movement triggered by the Middle East crisis.
The last few days of trading in September saw BTC hovering around the $64,500 level. The market anticipated a more positive start to the month to drive the “Uptober” narrative. However, following the missile strike by Iran on Israel on October 1, the asset shed nearly $4,000. Investors seem to have adopted caution as the war rhetoric intensifies. Israel’s Prime Minister, Benjamin Netanyahu, has vowed to retaliate.
The anticipation of a full-scale conflict in the Middle East may have ignited a major liquidation fever. Per Coinglass data, in the past 24 hours, 97,354 traders were liquidated, putting total liquidations at $274.21 million.
Bitcoin and Ethereum recorded the highest crypto liquidations, $57.97 million and $65.26 million, respectively. Over the past few days, an estimated $700 million has been liquidated, with BTC accounting for a huge fraction of that volume.
Interestingly, in mid-April, when Iran launched drone attacks on Israel, the price of BTC dropped over 8%. This volatility and response to geopolitical conflict have raised concerns about Bitcoin’s future. Some investors have questioned the reliability of the cryptocurrency as a security and safe-haven asset.
Will This Impact Institutional Interest?
Over the years, Bitcoin has evolved as a reliable hedge against inflation and a suitable long-term investment option. However, some believe the digital asset is still in a state of transitioning to replace other assets like gold.
Notably, Markus Thielen, Head of Research at 10x, maintained that Bitcoin’s price might continue to face headwinds from external factors. These include economic and liquidity cycles, as seen from the U.S. Federal Reserve interest rate cut.
Despite all these, Bitcoin has continued to attract the interests of institutional investors. Overall, these investors’ accumulation of BTC remains relatively higher than the mined supply, helping to maintain its value.
Additionally, in the long term, Bitcoin’s scarcity and the halving mechanism will play a crucial role in maintaining price stability. Experts insist these factors will help support Bitcoin in the long run and keep it bullish.
Traditional Asset Outlook and BTC Price’s Long-Term Outlook
Middle East tensions in the broader financial market have pushed the price of crude above the $70 level. Brent and Murban crude sold for $75.65 and $75.35 at the time of writing, respectively. Meanwhile, gold, a new high of $2,665 per ounce following the missile attack, has corrected to $2,646.30.
Despite speculation that a possible escalation might have caused some downward price movement, analysts anticipate a rebound soon. Their optimism lies in the growing acceptance of digital assets through Exchange-Traded Funds (ETFs).
Spot Bitcoin ETF, launched in January, has performed well overall. As per data, the total net assets of all U.S. spot BTC ETFs have topped $55.80 billion. This signals that institutional investors remain confident in the growth trajectory of Bitcoin.
