How Crypto Markets Reacted to the Recent Events in the Middle East

17 Apr 2024

Last weekend, the whole world was focused on the escalation in the Middle East. Iran carried out its long-promised attack on Israel.

This event was special due to the following factors:

— Everyone knew that this attack would happen as it was widely announced in the press.

— Most markets are closed on weekends. Crypto markets are the only global markets that trade 24/7. Thus, it is possible to monitor investor reaction and evaluate whether Bitcoin served as a safe-haven asset in this situation.

The result was quite predictable. With just one available market, traders rushed to sell crypto to raise cash, which led to a short-term drop in the price of Bitcoin.

Source: TradingView

More speculative coins suffered stronger sell-offs. This is not surprising as such coins have a larger percentage of short-term holders, who are extremely sensitive to the news agenda.

Investors quickly found out that Iran’s attack was limited (compared to market horror stories that preceded the attack), so crypto prices started to recover on Sunday.

Nevertheless, the initial reaction was a sell-off. So, has Bitcoin failed the “safe-haven asset test”? The answer is no.

Let’s look at the classic safe-haven asset, gold, during a major risk event – the beginning of the coronavirus pandemic. Back in March 2020, when markets realized that humanity faced a global pandemic, gold prices fell for half a month and then started to rebound.

No matter how safe the asset is, it may face a wave of sales in the first days of panic, as investors sell everything to raise cash. It should be noted that price action in the first days of turbulence has no impact on the longer-term trends of the asset.

Those who are worried about short-term fluctuations of Bitcoin may use Bitbanker’s capital protection product for investments in BTC.