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What happens to Bitcoin if the U.S. joins the Iran-Israel war?
The ongoing Israel-Iran war has seen Bitcoin (BTC) remarkably resilient in the face of geopolitical tensions. Despite the potential escalation of the conflict, BTC remained range-bound within $100K-$110K. However, amidst the uncertainty, market experts have sounded the alarm bell regarding the impact of a U.S. involvement on the digital asset’s trajectory.
As the war rages on, QCP Capital warns that the conflict could lead to inflation and negatively impact risk-on markets, including Bitcoin. The trading desk has cautioned that an escalation would not only affect global risk markets but also push the Federal Reserve to hold off on a rate cut in the second half of the year. This development could have significant implications for BTC’s performance.
Notably, despite the ongoing conflict, Bitcoin is exhibiting bullish short-term market positioning. There was a premium for calls (bullish bets) in the near term, as seen in rising 25 Delta Skew for 1-week (8%) and 1-month (5%) tenors. This suggests that option traders are expecting a rebound in the short term despite a recent drop from $108K to $103K.
On the other hand, the market positioning also reflects the demand for puts (bearish bets) and hedging activity for end-year option expiry. This sentiment echoes QCP Capital’s warning about potential inflationary pressures and market volatility caused by the war. The digital asset is now seen as a risk-off asset by traders, mirroring its behavior during previous geopolitical tensions.
Bitcoin’s correlation with traditional markets also warrants attention. As the conflict escalates, it appears that BTC is behaving more like a high-beta tech stock rather than a hedge asset. This could imply that investors are seeking safe-haven assets in times of turmoil and are moving away from risk-off investments, including Bitcoin.
As tensions continue to rise, Bitcoin’s performance will likely be contingent upon the war’s outcome. If the U.S. joins the conflict, there is a high likelihood of negative implications for Bitcoin, as QCP Capital warns of inflationary pressures and a potential dent in risk-on markets later in the year.
In conclusion, it is uncertain whether Bitcoin will act as a hedge or follow traditional equities if the U.S. joins the war.
Source: ambcrypto.com
