Bitcoin and the broader cryptocurrency market came crashing down soon as the Israel-Iran escalated on Tuesday, marking a bearish beginning to BTC’s best month historically. The Bitcoin price is down 3.16% to $61,715 levels while the altcoins led by Ethereum have plummeted anywhere between 5-10%. Bitcoin Price and Altcoins Face Huge Selling Pressure After one of the best-performing September in a decade, Bitcoin and altcoins have come under selling pressure as the bulls fail to sustain the Bitcoin price above $65,000. The selling pressure further escalated on Tuesday as Iran fired 200 ballistic missiles on Israel while escalating the war between the two nations. Bitcoin holds the track record of 20% gains in October, however, it’s down by 4% in the first two days. Sean McNulty, director of trading at liquidity provider Arbelos Markets stated that this is a “momentary setback”. He added that “The seasonal trend of October being the best month for Bitcoin is alive and well”. The markets will continue to remain on high alert as Israeli Prime Minister Benjamin Netanyahu has vowed to retaliate against the recent Iran strikes. On Tuesday, the Bitcoin ETF outflows also surged to $242 million breaking the eight consecutive days of inflows. Some market analysts believe that Bitcoin’s all-time high ain’t coming anytime soon at least until mid-November. Additionally, the weakness in the US PMI data highlights the shrinking economy putting additional selling pressure. Popular crypto analyst Benjamin Cowen stated that following the Fed rate cuts in 2019, the Bitcoin price rallied for two weeks only to drop to the 100W SMA 2 months later. If the cryptocurrency repeats this pattern, the correction could extend to $50,000 levels by mid-November, as per the below chart shared by Cowen. Just to offer a different view to consider other than the "up only" view mostly shared on this platform, in 2019, #BTC rallied for 2 weeks after the 1st rate cut, then dropped to the 100W SMA 2 months later, which would correspond to mid-November. pic.twitter.com/ogicF89JrM — Benjamin Cowen (@intocryptoverse) October 2, 2024 With the tensions in the Middle East soaring, investors are flocking to safe-haven assets such as bonds, gold, oil, and the US Dollar. Furthermore, as per the JPMorgan report, the revenue of Bitcoin mining companies dropped to the lowest levels in September. If the BTC miners capitulate further, it can trigger another sell-off in the near term. How the Israel-Iran War Can Impact the Market The escalation of wars usually creates a knee-jerk reaction in the market. However, historical trends can prove to be the right guides here. Following Russia’s invasion of Ukraine in February 2022, the S&P 500 tanked by 11.5% in three months. Since Bitcoin shares a close correlation with the S&P 500, it will be interesting to watch the Bitcoin price movement going ahead following the Israel-Iran war situation. Following the escalating Middle East tensions, the US market gave a similar reaction on Tuesday with the S&P 500 ending 1% down. On the other hand, oil prices surged by 5% as the market is pricing-in the probability of a real war. Citing the historical market patterns, the Kobeissi Letter states: “The S&P 500 falls -2% on average when a major conflict begins. The total average drawdown of these major events is -8.2%. However, there are many other factors at play that sway returns”. The most important factor is whether the war breaks out during a recession or not. If the market is not in a recession, the average 12-month return for the S&P 500 in a war year is 9.5%. However, during a recession year, these returns turn -11.5%. The Kobeissi Letter cites the example of the 9/11 attack in 2002 when the S&P 500 tanked by 18% as the market was already in recession. It will be interesting to see whether a Fed stimulus prevents the US recession this year. A more recent example would be the 9/11. This happened during a time that the economy was already in a recession. Interestingly, this came at a time when the Fed has been hiking interest rates as they were doing since 2022. The S&P 500 fell -18% in 12 months after 9/11. pic.twitter.com/JVk0vPvgyt — The Kobeissi Letter (@KobeissiLetter) October 1, 2024 The post Why Is Bitcoin Price Down Today? appeared first on CoinGape.

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