How the Israeli-Palestinian war will affect the Crypto market
As Israel declares a state of war against the Palestinian militant group Hamas, the crypto community is speculating how Bitcoin (BTC) and the broader altcoin markets will react.
Market volatility increases during geopolitical crises such as war or other military conflicts. When commodity prices like oil and gold rise, investors shy away from riskier assets like stocks and crypto.
A crypto analyst expects volatility in the short term.
Renowned crypto analyst Miles Deutscher talks about the impact of the Israeli-Palestinian war on the S&P 500. He wrote on X (Twitter):
“Evidence suggests that markets often recover quickly from wars and other geopolitical shocks, despite initial volatility.”
As the screenshot below shows, while there was uncertainty in the first month of the conflict, the market started to take a mostly positive turn three months later. In 75% of cases, the S&P 500 was positive 12 months after the military event.
The information covered military conflicts between the Pearl Harbor incident in December 1941 and the Iraq War in March 2003.
Except for the Russia-Ukraine war, the cryptocurrency market has not seen major geopolitical conflicts. Therefore, it is difficult to determine the individual impact on crypto assets. However, there is a correlation between Bitcoin and the S&P 500 index.
Read more: Crypto vs. Stocks: Where to invest your money in 2023
As a result, along with the S&P 500, Bitcoin can show volatility in the short term.
According to a Bitfinex Alpha report shared with BeInCrypto, there will be “higher levels of volatility” in Bitcoin's price action. The screenshot below shows that the daily historical volatility is above the 200-day exponential moving average (EMA).
According to TradingView data, Bitcoin (BTC) is down about 2% since the Israeli-Palestinian conflict began on Saturday.
Read more: Cryptocurrency trading courses tailored for beginners.
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For BeInCrypto's latest Bitcoin (BTC) analysis, click here.
Disclaimer
Adhering to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This newsletter aims to provide accurate and up-to-date information. However, readers are advised to independently verify facts and consult with experts before making any decisions based on this content.
