The crypto market crash continued on Wednesday morning as investors embraced a risk-off sentiment amid the ongoing crisis in the Middle East. Bitcoin and most altcoins retreated, with the total market capitalization in the industry falling to $3.38 trillion.
Crypto market crashes as Iran and Israel crisis escalates
Bitcoin, altcoins, and the stock market crashed on Tuesday and Wednesday as concerns about the Middle East accelerated. Israel and Iran continued launching missiles at each other.
Most importantly, Donald Trump sent signals that the US may be involved in the crisis. In a series of statements, he called for Iran to “total surrender” and hinted that the Supreme Leader, Ayatollah Ali Khamenei, was an easy target. His statement on Khamenei came after it was reported that he had asked Israel not to kill him.
Security analysts believe that the US may become involved in the ongoing crisis. For one, it is the only country with massive bunker-busting bombs that Israel will need to destroy the deepest sections of Iran’s nuclear program.
The ongoing crisis has triggered a risk-off sentiment among market participants. This explains why the stock market and other risky assets like crypto crashed on Tuesday.
The implication is that a prolonged crisis will disrupt shipping routes, boosting tanker prices. It will also lead to higher crude oil prices, with Brent and West Texas Intermediate (WTI) rising to over $70.
Higher shipping and energy prices will lead to higher inflation, which in turn, will make it difficult for the Federal Reserve to cut interest rates in the near term. Remember, the Fed is also observing the impact of Donald Trump’s tariffs.
Is this the end of the crypto bull run?
Odds are that this is not the end of the crypto bull run as the industry’s fundamentals are solid.
First, there are signs that Bitcoin demand is rising. Data shows that spot Bitcoin ETFs have had inflows in the last seven consecutive days, bringing the cumulative total to $46.2 billion. Bitcoin ETFs now hold over $128 billion worth of assets.
The same trend is happening with Ethereum, where its ETFs have had inflows in the last seven consecutive weeks. These funds now hold over $10 billion in assets after having cumulative inflows of $3.8 billion.
Bitcoin demand has continued rising this year, with Strategy buying over 10,000 coins last week. It now holds 592,000 coins, and Michael Saylor expects to continue the trend for a while.
Second, the supply of Bitcoin in exchanges continued to fall this year. Santiment data shows that exchanges hold about 1.1 million coins, down from over 1.5 million earlier this year. Supply in the over-the-counter market has continued falling.
Bitcoin price has strong technicals
The other reason why this is not the end of the crypto bull run is that the coin has formed a cup-and-handle pattern, a popular continuation sign. This pattern comprises of a horizontal level and a rounded bottom, and a handle.
Bitcoin is now forming the handle section, which will lead to a strong bullish breakout in the near term. This pattern has a depth of about 30%, meaning that the coin will jump to about $141,685.
BTC prepares for a big breakout
Meanwhile, the chart above shows that Bitcoin price is about to break above the ascending trendline that connects the highest swings since December 17.
A break above that level could lead to a multi-year bull run that may push it to over $200,000 as some analysts predict. This, in turn, will trigger an altcoin bull run since these tokens often mirror the performance of Bitcoin.
Read more: Bitcoin price prediction: BTC path to $300,000 revealed
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