Bitcoin Recovery After Apparent End of Persian-Israeli Tensions
There is no consensus in the market on what the effect of this geopolitical conflict will be on prices
After several days of uncertainty for geopolitical reasons, the price of Bitcoin recovered significantly this Friday. After Thursday’s collapse following Israel’s retaliatory attack on Iran, the market gained ground again, given the possible freezing of tensions between Tehran and Tel Aviv.
Israel had promised a harsh response to Iran for the strong missile and drone attack last Saturday, April 13. Meanwhile, Iran said it was ready to carry out much more devastating attacks if Israel responded. However, according to ‘Al Jazeera’, Iranian authorities are downplaying the nature of the attack.
This scenario, as complicated as it may seem, is just the tip of the iceberg of a deep enmity between the two regimes. This hostility, it seems, will not lead, for the moment, into an open war that could convulse the markets.
At least, this seems to be investors’ interpretation of the cryptocurrency market. Some of that capital returns to Bitcoin, allowing its price to rise again to $64,000 per token. The other important element of this equation is the halving.
Uncertainty in Regards to Future Effects of Fourth Bitcoin Halving
There does not seem to be a consensus on the effect that this fourth ‘halving’ will have on the prices of the queen cryptocurrency and on the market as a whole. Traditionally, this event has been considered bullish, as it has coincided with cycles of strong increases in the weeks before and after its completion.
This time, however, analysts believe that factors such as the effect of BTC spot exchange-traded funds (ETFs) have brought forward much of this bullish cycle, while others believe that the global situation is as different from the past ones that it is impossible to use the previous halvings as a reference.
For Markus Thielen, founder of 10x Research, this event clearly will not cause rises in bitcoin and, in fact, could bring just the opposite because it will not meet market expectations. According to this expert, the few net inflows into BTC spot ETFs are a sure sign that there will not be a big price rally once this process is complete.
“I think a lot of the bitcoin rally is based on mistaken expectations. I think what’s really crucial is that these ETF flows didn’t stop out of nowhere, they stopped around March 12, when the inflation reading came out and the Production Price Index,” he explains.
Bitcoin Regains Strength in the Middle of the Halving Day
The trend in which Bitcoin recovers part of the lost ground occurs within the framework of the halving. This automatic software update of the largest cryptocurrency causes a 50% cut in rewards for miners. Thus, the event becomes one of utmost importance for the entire cryptocurrency market.
In the short term, the halving could have a negative effect on the price of BTC. In the end, it will all depend on the reaction of Bitcoin mining companies, many of which could face the prospect of bankruptcy. Another group would be forced to liquidate part of its reserves to maintain operating expenses. Meanwhile, a smaller team, and at the same time dominant, would come out well.
So far, the Bitcoin price is recovering, but investors are keeping a cautious eye. A third factor to consider in the short term is macroeconomic conditions in the United States, where inflation threatens to lengthen the era of high interest rates.
By Leonardo Perez