Actually, every time there is a conflict in the Middle East, the cryptocurrency market tends to tremble, but often rebounds afterward. For example, during the 2020 U.S.-Iran conflict, Bitcoin rose by 50% in a month; during the 2022 Russia-Ukraine war, it also rebounded by 40% in a month. However, the recent few reactions have been faster, such as the 2023 Israel-Palestine conflict, which saw recovery in a week, and the 2024 Iranian drone attack, which recovered in as little as 24 hours. But this time is different, as Israel directly bombed Iranian nuclear facilities, which could trigger a full-scale war, leading to a more intense market reaction.
This drop has several special points:
1. Escalation of war risks: Israel's airstrike on Iranian nuclear facilities could provoke direct retaliation from Iran, and even U.S. involvement, creating a systemic risk that led to capital fleeing.
2. Technical overselling: Bitcoin's RSI dropped to 35 (oversold zone), and Ethereum fell below the critical support of $2500, indicating a technical demand for rebound.
3. Severe leverage liquidation: $1.16 billion was liquidated in 24 hours, with 92% being long positions. After panic selling, short covering could drive a rebound.
4. Capital-driven short dominance: The funding rate for Bitcoin perpetual contracts turned negative, indicating a short dominance, but some shorts have begun to take profits, potentially building momentum for a rebound.
The key is to watch these three signals:
1. Geopolitical dynamics: Will Iran retaliate directly, and will the U.S. intervene? If Iran only issues verbal warnings, the market will likely calm down quickly.
2. Capital flows: If BlackRock's Bitcoin ETF sees more than $100 million inflow in a single day, it indicates institutions are bottom-fishing, leading to a quicker rebound.
3. Technical aspects: Can Bitcoin hold the $100,000 and Ethereum the $2500 levels? If they can hold, the chances of a rebound increase significantly.
Advice for everyone:
• Short-term players: If the conflict eases, you can try light positions at Bitcoin $102,000 and Ethereum $2500, setting stop-loss orders. If the situation worsens, it’s better to stay in cash.
• Long-term holders: Wars will not change the long-term trend, especially after Bitcoin's halving (which occurred in April 2024), increasing its scarcity, so consider adding to positions gradually.
In conclusion:
The rebound after this drop will likely occur within 3 to 14 days, depending on how the conflict develops. However, in the long run, the trends for Bitcoin and Ethereum remain unchanged, with institutional capital still flowing in and the scarcity after the halving supporting prices. Therefore, short-term volatility presents opportunities, and there is no need to panic for long-term holders.
