Bitcoin has recently experienced a significant decline, retreating to $87,000, marking a drop of over 10% from its highest level this year and approximately 30% below its all-time high. This bearish trend could persist, particularly as Bitcoin has formed a bearish flag pattern, indicating potential further declines as geopolitical tensions escalate.
The price of crude oil has surged in response to increasing geopolitical risks, particularly following Donald Trump”s recent threats toward Iran. Trump has issued warnings to the Iranian government, urging them to negotiate an end to their nuclear weapons program or face a potential military response. These statements have heightened fears of a possible attack, with a Polymarket poll indicating a 60% chance of an attack by March 31 and a 70% chance by December 31.
In light of these developments, crude oil prices have risen sharply, with Brent crude hitting $69.20, up from a yearly low of $58. The escalation in tensions has not only affected oil prices but has also led to increased interest in safe-haven assets. Gold, for instance, continues on a bullish trajectory as investors seek stability amidst uncertainty.
For Bitcoin, the current geopolitical climate presents challenges that could hinder its price recovery. Historically, Bitcoin has not proven itself as a reliable safe-haven asset, often experiencing price drops during periods of heightened risk. Previous events, such as Trump”s announcement of tariffs last year and the recent conflict in the region, have resulted in similar downward movements in Bitcoin”s value.
Additionally, the threat of a military conflict could lead to higher energy prices, which in turn may drive inflation. This scenario would typically prompt central banks like the Federal Reserve to consider cutting interest rates, a condition under which Bitcoin has previously thrived. However, the current sentiment in the market has led to significant asset withdrawals from Bitcoin ETFs, with over $19 million in assets shed on Wednesday alone, following a staggering $147 million the previous day.
From a technical perspective, Bitcoin has seen a drastic fall from a peak of $128,000 in October to a low of $80,400. The formation of a bearish flag pattern, characterized by a long vertical decline followed by an ascending channel, suggests that further declines may be imminent. Currently, Bitcoin is trading just above the lower boundary of this channel, with key support levels positioned at $80,400—a drop below this threshold could indicate even more significant declines, potentially targeting $74,000, reminiscent of its lowest levels seen last April.
The combination of these geopolitical factors and technical indicators paints a concerning picture for Bitcoin in the near term. Investors should remain vigilant as the situation unfolds and reassess their strategies accordingly.
