Bitcoin has experienced a rapid decline of approximately 13% in just three days, from April 11, 2024, to April 13, 2024. This movement occurred swiftly following an escalation in conflict between Iran and Israel, with Iran retaliating against Israeli attacks on April 1, 2024.
This situation has sparked significant concerns in the financial markets, including the crypto market, due to predictions of a potential major war involving more than two countries.
Investor Concerns Over Potential War
The current potential for war is evident in the escalating conflict between Iran and Israel after Iran launched dozens of drones that successfully bypassed Israel’s national security system. Following this attack, there have been various responses from political figures, including the President of Israel.
President Israel declared that Iran had declared war through this attack, leading to widespread investor concerns about potential movements in financial assets. These concerns were reinforced by the liquidation of $1 billion in crypto futures markets over the past two days. As a result, many investors are still preparing to sell to mitigate the risk of further declines in the crypto market.
In economic theory, two factors can lead to economic setbacks and market turmoil: disease outbreaks and war. Given this theory, many are worried that the global economy will deteriorate further, prompting them to sell their financial assets, including crypto, in favour of holding cash. Cash is still considered the best asset to hold in times of crisis as it can be used to meet basic needs.
As a result, many are liquidating their assets to hold cash, causing investment and speculative assets to become tertiary commodities with declining volumes. These concerns revolve around several factors, including the potential rise in commodity prices such as oil, changes in global trade, and the potential for a third world war.
The potential for a third world war arises from two assumptions: America’s participation in supporting Israel and several BRICS countries supporting Iran. Currently, one country that seems to be preparing is North Korea, which Israel considers its enemy to this day. Furthermore, if America intervenes, there is a possibility that Russia will get involved, along with China, forming a coalition between the West and the East, potentially triggering a third world war.
Bitcoin Price Consolidation Until Halving
As a result, many are concerned about the sustainability of the global economic situation and financial markets. In this situation, most assets, including Bitcoin, are seen declining, with daily candlesticks still showing red.
Most likely, as long as these concerns persist, Bitcoin will consolidate around $61,000 to $65,000, but everything could change after the halving. Bitcoin Halving is predicted to occur on April 20, 2024, when BTC may make its movement clearer after the halving.
For now, market predictions still point to the potential for further correction, given the pattern of previous halvings that resulted in corrections before or after the halving. Considering there hasn’t been a major correction before the halving, there is a possibility that Bitcoin will decline after the halving, especially if the conflict continues to escalate.
However, these predictions could still be wrong, so if engaging in short-term transactions in the market or trading, traders should use good risk management so that they can still take advantage of the momentum of a potential bull market in 2025.
A good step to take during a correction is to buy to take advantage of long-term momentum, thus potentially gaining larger profits albeit requiring more time compared to short-term trading.
