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Geopolitical Tensions: Bitcoin Retreats to $27K Amid Escalating Hamas-Israel Conflict

Oct 12, 2023 at 09:47 am

Amidst rising geopolitical tensions, there is a prevailing sentiment among traders that assets associated with higher risk may face further declines.

On Wednesday, Bitcoin saw a 1.2% dip, trading slightly above $27,000 in the Asian afternoon session. This dip is linked to the worsening situation in the Hamas-Israel conflict, which has notably undermined investor confidence in assets deemed riskier.

Earlier this week, traders conveyed to Bitsday their anticipations of price decreases, as investors displayed a preference for moving away from traditional equities and assets with higher perceived risk. Instead, they leaned towards investments in gold and oil, which have experienced price surges of up to 6% in the past week.

The broader cryptocurrency market also witnessed a downturn, with the Bitsday Market Index (BMI) indicating a 1.6% decline in the past 24 hours. Ether, the second-largest cryptocurrency, faced a 2.2% drop, extending its weekly losses to over 5%. XRP tokens led the decline in alternative currencies with a 3% decrease.

Several other major tokens also experienced declines. Both Polkadot’s DOT and Polygon’s MATIC registered a 3% slide. On the flip side, Tezos’s XTZ witnessed a substantial 8% drop. Render network’s RNDR was the outlier among large-cap tokens, recording a 3% gain in the past 24 hours.

Market analysts at FxPro noted that Bitcoin's recent attempt to breach the $28,000 mark triggered a "wave of selling," ultimately driving the price back to $27,000. This suggests that investors are presently cautious about keeping their capital in higher-risk positions.

A noteworthy observation is that the pressure on Bitcoin aligned with a rebound in risk appetite noted in traditional markets, particularly the gains seen in U.S. stocks on Tuesday. FxPro attributed this phenomenon to the events in the U.S. defaulted debt markets on Monday, rather than a direct transfer of funds between asset classes.

Read more: North Korea Unmasked: Behind the $150 Million Cyberattack on Mixin Network

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