5 min readRisk sentiment has steadied after taking a hit after Israel hit targets in Iran. The move came in retaliation for Iran’s missile attack on Israel and threatens to escalate tensions in the Middle East.
However, there is some level of confusion surrounding the event, and initial heightened fear has faded, helping riskier assets such as Bitcoin and equities recover from lows. At the same time, Gold and oil have fallen back from a spike higher.
- Bitcoin recovers from a spike below 60,000 back to 66,000.
- The market mood steadies after Israel’s attack on Iran
- Is the halving already priced in?
Iran plays down Israel’s attacks
However, there was some level of confusion surrounding the event, and initial heightened fear has faded, helping riskier assets such as Bitcoin and equities recover from overnight lows. At the same time, Gold and oil have fallen back from a spike higher.
US officials say that there was a strike while Israel hasn’t yet claimed responsibility, and Iranian state media are playing down the attack with no damage reported. This downplaying of the attack helps risk appetite recover.
Bitcoin spiked to a low below 60,00 before rebounding higher to 64,500, posting gains on the day.
Bitcoin trades appear to have pushed past these events, with prices currently stabilizing at 66,000 USD following the Bitcoin halving.
Bitcoin Halving
The event happens every four years and was written in Bitcoin’s code by its creator, Satoshi Nakamoto. It reduces miners’ rewards by 50% to reduce the rate at which Bitcoin is created, creating scarcity and supporting the price. The Bitcoin supply is capped at 21 million tokens.
Miners’ rewards are now slashed from 6.25 to 3.125. This will make it more expensive to put Bitcoin into circulation, which has lifted the price to fresh all-time highs in previous cycles.
Is Bitcoin halving priced-in?
However, there is also an ongoing debate about whether this event is priced in or not. On the one hand, efficient market theory would mean that the halving, which is well known in advance and programmed into Bitcoin’s code, makes it impossible for Bitcoin to be undervalued.
However, when analysing Bitcoin’s performance in the three previous hiking cycles, the price shows a pattern of rising prices, given the impact of the supply and demand factors.
While it is impossible to say with any degree of certainty what will happen to Bitcoin’s price after the halving event, it is clear that this halving event differs from previous ones. The macroeconomic backdrop of higher inflation and high interest rates, combined with geopolitical tensions, differs from the macro climates in 2016, 2012, and 2008. The spot Bitcoin approval at the start of this year has also changed the Bitcoin landscape.
Source
https://www.bloomberg.com/news/live-blog/2024-04-19/middle-east-latest?sref=pGKbYhUv
Author
Risk Disclaimer
