- Rising geopolitical tensions, particularly between Iran and Israel, contribute significantly to Bitcoin’s volatility and investor caution.
- Gold sees increased buying as investors seek stability; Bitcoin struggles as risk asset amidst global political tensions.v
On Tuesday, the value of Bitcoin (BTC) dipped below the crucial $61,000 level, marking a broader downturn in the cryptocurrency market, which saw a reduction of nearly $200 billion in total market capitalization over the weekend.
This decline of Bitcoin’s recent performance, which reached a two-month high of $66,500 last Friday, fueling expectations for a robust final quarter of the year. However, the landscape has shifted due to escalating geopolitical tensions, particularly in the Middle East, posing risks to volatile crypto assets such as Bitcoin.
Investors are literally selling #Bitcoin to buy #gold as geopolitical tensions spike. pic.twitter.com/ib7c38K75K
— jeroen blokland (@jsblokland) October 1, 2024
Market specialist Jeroen Blokland, who manages the Blokland Smart Multi-Asset Fund, has observed a trend where global investors are shifting their assets from Bitcoin to gold.
This strategic reallocation is largely due to rising conflicts between Iran and Israel, prompting investors to seek refuge in gold, historically known for its stability in times of crisis.
Approx. 10 million civilians are the targets of Iranian projectiles. pic.twitter.com/680uDJm3CJ
— Israel Defense Forces (@IDF) October 1, 2024
Tensions escalated on Tuesday with reports of missiles launched from Iran towards Israel. In response, the White House issued warnings about an imminent Iranian ballistic missile attack on Israel, highlighting the seriousness of the geopolitical strife and its potential to destabilize regional security.
“Iran’s attack is a severe and dangerous escalation. There will be consequences…We will respond wherever, whenever and however we choose, in accordance with the directive of the government of Israel.”
Watch IDF Spokesperson RAdm. Daniel Hagari regarding Iran’s large-scale… pic.twitter.com/A8pyC7eawI
— Israel Defense Forces (@IDF) October 1, 2024
The U.S. administration has affirmed its support for Israel’s defensive measures and warned Iran of severe consequences if it proceeds with military actions. This geopolitical unease has contributed to the diminishing appeal of Bitcoin as a risk asset.
Amidst these developments, analysts have flagged concerns about Bitcoin being overbought following its nearly 5% increase in value leading up to September 27. This surge coincided with a uptick in net inflows into global crypto exchange-traded products (ETPs), reaching a peak since mid-July.
Terrible close for $BTC, only good news, 4hr RSI getting low again and maybe we can hold support
Bad news, daily RSI has plenty of room to go lower pic.twitter.com/Z2t2BcktfG
— Don't follow Shardi B if you hate Money (@ShardiB2) October 1, 2024
In particular, the net purchasing volume of U.S. Bitcoin ETFs last week amounted to 16,774 BTC, which surpassed the average monthly production rate of newly mined Bitcoin, approximately 13,500 BTC.
Gold only needs to rally 0.5% to make a new record high. But the $GDX & $GDXJ must rally 5%, or 10x as much, to take out their highs from last week. That's because a tiny dip in #gold resulted in a large correction in mining stocks. The least loved gold bull market ever lives on.
— Peter Schiff (@PeterSchiff) October 1, 2024
As usual, Peter Schiff is highlighting the performance differences between physical gold and gold mining stocks. He notes that gold only needs to increase by 0.5% to reach a new record high, demonstrating its relative stability and the closeness to its peak price.
In contrast, the gold mining ETFs, $GDX and $GDXJ, need to rally by 5% to surpass their highs from the previous week.
This difference in required percentage gains illustrates how a minor decrease in gold prices can lead to a disproportionately larger correction in the prices of mining stocks.
Peter comments on the lack of enthusiasm in the market for gold, calling it “the least loved gold bull market ever,” suggesting that despite gold’s solid performance, the broader investor sentiment towards it remains tepid or indifferent.
Buy both. But if you are a risk taker, load up on the miners. I did.
— Peter Schiff (@PeterSchiff) October 1, 2024
However, this bullish trend faced a setback on Monday when Federal Reserve Chair Jerome Powell addressed investors, signaling a cautious approach to future rate cuts, as reported by CNBC.
Powell’s remarks underscored the Federal Reserve’s flexible policy stance, dependent on ongoing economic evaluations, which has introduced a level of caution among investors, contributing to the recent pullback in Bitcoin’s price.
The current price of Bitcoin (BTC) is $60,811.40, which is down 4.44% over the past few hours. The daily range is between $60,811.40 and $64,100.09, with a market cap of $1.202 trillion. The trading volume over the past 24 hours has been $46.3 billion.
