The price of the flagship cryptocurrency Bitcoin plunged around 4% in 24 hours after Iran fired around 180 ballistic missiles at Israel in what Iran’s Revolutionary Guard Corps said was a retaliation for the assassinations of Hamas’s political leader and an Iranian commander, before it started recovering,
According to a recent report by QCP Capital, first reported by Bitcoin.com, the cryptocurrency space was “hit much harder” than other risk assets by the rising geopolitical tensions that culminated in Israel’s ground offensive into Lebanon and Iran’s ballistic missile attack, as the S&P 500 index lost around 1% of its value, and oil jumped more than 2%.
Per the report, Bitcoin seems to have found support at the $60,000 level, but “further escalation could push us much lower, possibly to the 55k level.” Geopolitics in the Middle East will “steal the limelight,” the report says, before adding that the “shallow sell-off suggests that the market remains well bid for risk assets.”
QCP Capital’s analysts added that the drop was a “minor setback” that “shouldn’t distract from the bigger picture.” IT adds that current policy actions and economic situations in China, which has been heavily supporting its equities market, are “reminiscent of Japan in the 1990s.”
Back then, it adds, the Bank of Japan cut interest rates and introduced negative interest rater to launch a then-novel quantitative easing program. It adds:
The flush of liquidity from the PBoC and potential fiscal support will likely support asset prices in China, with bullish sentiment potentially spilling over globally to support risk assets, including crypto.
According to Investopedia, quantitative easing also provides banks with more liquidity and encourages lending and investment, while adding to their reserves.
As CryptoGlobe reported, Bitcoin started its month of October with over $540 million worth of crypto positions being liquidated in just 24 hours alone. Long positions were particularly hard hit with over $468 million worth of longs being liquidated, as investors rushed to unwind their bets amid the rising uncertainty.
Featured image via Unsplash.
