As escalating tensions in the Middle East weigh on the cryptocurrency market, demand for Bitcoin has fallen significantly.
According to Brave New Coin, analysts blame the downturn on Bitcoin's 8% drop last week, due to increased selling pressure following Iran's recent missile attack on Israel. bitcoin liquid index.
Source: Brave New Coin Bitcoin Liquid Index
On Tuesday, Iran fired more than 180 ballistic missiles at Israel in retaliation for Israel's attack on Hezbollah strongholds in southern Lebanon. As CryptoQuant data reveals, rising tensions in the region are having a direct impact on Bitcoin demand. The net taker volume indicator, which measures net buying and selling pressure, has declined significantly since the escalation began.
“Buying pressure remains subdued since the Iran attack,” said CryptoQuant analyst JA Martun. interview With The Block. “A decline of more than $150 million in net taker volume indicates significant selling pressure, but the fact that it has not exceeded $100 million since Tuesday suggests a lack of strong buying momentum. There is.”
This downturn is not just limited to Bitcoin. According to Brave New Coin, Ethereum also experienced a significant decline of 12.60% last week, dropping below the $2,300 level on October 4th. Ethereum Liquid Index.
Market sentiment shifts to neutral
Andre Dragos, head of research at Bitwise in Europe, observed a negative trend in net purchase volume on Bitcoin spot exchanges over the past three days. But he pointed to signs of near-term seller exhaustion, citing increased long liquidations in Bitcoin futures, the highest levels since August 5, when Bitcoin hit its recent low.
“Furthermore, since the August lows, short-term holders have transferred the most Bitcoin to exchanges in losses,” Dragosh explained. He added that sentiment has moved from a relatively high level to a more neutral level, according to the Bitwise Cryptoassets Sentiment Index.
As complexity increases, glass node data According to the report, Bitcoin's illiquid supply recently reached an all-time high, while the supply classified as highly liquid has fallen to its lowest level since the beginning of the year. This signals a major change in market dynamics with long-term holders holding on to their assets despite the current volatility.
Source: Glassnode
European Bitwise Research Analyst Ayush Tripathi says that despite the recent price drop, the supply of Bitcoin held by long-term investors (those who have held Bitcoin for at least 155 days) has increased. He pointed out that he was doing so. Since early October, the supply held by these investors has increased, suggesting that while short-term demand has weakened, confidence in Bitcoin as a long-term investment remains strong.
“The increasing supply of Bitcoin held by long-term holders since early October suggests that while short-term demand has weakened, there remains confidence in Bitcoin as a long-term investment. ” Tripathi said.
QCP Capital suffers temporary slump
Despite the current challenges, analysts at QCP Capital believe the downturn in Bitcoin demand is temporary. They highlighted the strong correlation between crypto performance and US stocks, and predicted that as stock prices recover, the crypto market will follow suit.
“Currently, macroeconomic factors, particularly in the US, are pushing up the prices of risk assets,” the analysts said. They pointed to the latest US ADP National Employment reportJob growth in September was stronger than expected, a sign of strength in the labor market that could prompt the Federal Reserve to take a more dovish stance on interest rates.
“ADP jobs report beat expectations, and tomorrow's non-farm jobs report will be key to confirming the strength of the US labor market. Expected rate cuts and labor force combination will increase risk assets “Possible,” QCP Capital analysts added.
Markets hesitant due to rising geopolitical tensions
Investors remained cautious in crypto market trading on Thursday as they awaited a possible Israeli response to the Iranian missile attack. This geopolitical uncertainty has increased investor risk aversion, leading to lower trading volumes and increased volatility in the cryptocurrency market.
While Bitcoin remains just above $60,000, Ethereum has experienced a drop below $2,300. The cautious sentiment is further reflected in subdued net taker volume, which has not exceeded $100 million since tensions escalated on Tuesday. This lack of strong buying momentum highlights the market's reluctance to commit to large investments amid continued geopolitical instability.
Long-term holders and institutional investors may find opportunities to accumulate Bitcoin at lower prices in hopes of a rebound once the geopolitical situation stabilizes. However, short-term volatility is likely to continue as markets absorb the impact of the ongoing conflict and adapt to changes in economic policy.
