Despite escalating geopolitical tensions in the Middle East, Bitcoin has shown resilience amidst a limited sell-off in risk assets. According to analysts at QCP Capital, while "Middle East geopolitics could steal the limelight for now, the shallow sell-off after the intensification of the conflict suggests that the market remains well bid for risk assets, and this minor setback shouldn't distract from the bigger picture."
In their report released on Wednesday, QCP Capital observed that the risk-off reaction in traditional finance assets was limited after Iran's missile attack on Israel. The S&P 500 index closed just 1% lower, and U.S. benchmark West Texas Intermediate oil prices rose by 2%. Bitcoin experienced a drop of approximately 5%, finding support around the $60,000 mark. Analysts caution that further escalation could push Bitcoin lower, potentially to the $55,000 level.
The analysts drew parallels between current policy actions in China and Japan's economic strategies during the 1990s, when the Bank of Japan implemented rate cuts and introduced negative interest rates to combat deflation. They noted that China's recent economic stimulus measures could positively impact risk assets, including cryptocurrencies.
Additionally, recent dovish comments by U.S. Federal Reserve Chair Jerome Powell suggest potential support for more rate cuts in 2024. QCP Capital analysts anticipate that asset prices will remain supported as both the U.S. Federal Reserve and the People's Bank of China enter a more aggressive cutting cycle.
As of 8:18 a.m. ET, Bitcoin's price decreased by around 4% over the past 24 hours, sitting at approximately $60,900 according to The Block’s Bitcoin Price Page. Meanwhile, in the UK, Shell, BP, and BAE Systems contributed to a modest gain of 0.05% in the FTSE 100 index, with analysts predicting potential disruptions to oil supply leading to a rise of about 2.5% for Brent crude futures.
Global markets exhibited mixed results, with Japan’s Nikkei 225 falling by 2%, while the Stoxx Europe 600 edged up and Hong Kong’s Hang Seng Index increased by over 6%. U.S. stock futures declined as escalating tensions in the Middle East prompted a cautious stance among investors.
Disclaimer: The Block is an independent media outlet providing news, research, and data. This article is for informational purposes only and should not be considered as legal, tax, investment, or financial advice.
