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As geopolitical tensions escalate, putting pressure on the cryptocurrency market, analysts warn that Bitcoin may retest critical support levels.
Recently, tensions between the US and Iran have caused the price of Bitcoin to fall from around $71,000 last week to approximately $67,000. The price briefly dropped to $65,000 over the weekend, highlighting the increasing uncertainty in the markets. BTC Markets analyst Rachael Lucas stated that Bitcoin had risen to $72,000 last week on the back of hopes for a diplomatic solution in the Middle East, but these gains were reversed as expectations weakened and concerns about oil supply resurfaced.
According to Lucas, developments around the Strait of Hormuz are increasing global inflationary pressures. This makes it more difficult for the Fed to cut interest rates, putting additional pressure on crypto assets. BTSE COO Jeff Mei stated that high oil and gas prices in the short term could drag down economic growth, creating downside potential in the crypto market. Mei argued that in this scenario, Bitcoin could fall to the $60,000 support level.
Bitrue Research Head Andri Fauzan Adziima also stated that markets will remain sensitive to news flow and experience high volatility. According to Adziima, Bitcoin could fall to $60,000 if US-Iran tensions escalate; however, if tensions ease and oil prices decline, the price could rise again above $70,000.
On the other hand, a significant divergence is observed in investor behavior. Lucas noted that individual investors are prone to panic and are adopting more wait-and-see or hedging strategies, while institutional investors are moving in the buying direction. The inflow of over $1.13 billion into US spot Bitcoin ETFs this month signals the end of a four-month outflow streak; Strategy’s continued Bitcoin accumulation and Morgan Stanley’s preparation to launch a low-fee Bitcoin ETF are among the developments supporting institutional interest.
*This is not investment advice.