Bitcoin (BTC) rebounds to $106K amid Middle East ceasefire and rate cut bets
Bitcoin surged above $106,000 as traders bet on increased possibilities of Fed interest rate reduction in response to Middle East tensions.
Key takeaways:
- Bitcoin quickly returned to $106,000, indicating strong institutional investor demand amid rising global instability.
- A steep 8% decline in Bitcoin hashrate has prompted concerns about mining stability amid Middle East tensions.
Bitcoin (BTC) reclaimed the $106,000 level on Monday, after briefly dipping below $98,500 on Sunday—its first drop beneath that mark in 45 days. Market fear subsided when US President Donald Trump declared a “total ceasefire” between Israel and Iran. Traders are now considering whether Bitcoin can reach $110,000 or whether downside risks remain.
Despite the volatility, the Bitcoin derivatives market remained stable.The price drop triggered $193 million in liquidations of bullish leveraged Bitcoin positions, representing 0.3% of total futures open interest. Despite the shakeout, the current $68 billion in leveraged positions has remained largely unchanged since Saturday.
The 4.4% dip in Bitcoin’s price during the last 12 hours is not very concerning by historical standards. Similar drawdowns have occurred three times within the prior 30 days. Still, other traders are concerned that a prolonged battle in Iran may hurt the global economy, pushing investors to take a more cautious, risk-averse approach.
Were Bitcoin miners impacted by conflict in the Middle East?
Some analysts observed a significant decline in Bitcoin’s hash rate, which dropped by 8%—from 943.6 million terahashes per second (TH/s) to 865.1 million—between Sunday and Thursday. This decline has fueled speculation about potential disruptions to mining operations in the region.
Some industry analysts have long claimed that unauthorised mining operations in Iran could consume up to 2 gigawatts of electricity, although these assertions are generally unsubstantiated. Due to a lack of accurate statistics, it is practically impossible to estimate the amount of mining capacity in Iran. However, analysts pointed out that sudden and sharp drops in hashrate are not uncommon.
Daniel Batten, for example, noted that such oscillations are commonly associated with transitory cutbacks in electrical generation in the United States. During instances of severe weather, Bitcoin miners frequently face substantial incentives to temporarily halt operations.
On April 22, Bitcoin’s hashrate dropped 27% as a result of severe storms in Texas and Oklahoma. These meteorological phenomena featured severe rain, big hail, and at least 17 documented tornadoes, all of which affected the local energy grid and hence mining activity.
Traders are more confident in Fed interest rate cuts
Meanwhile, oil prices fell on Monday after reaching $77 on Sunday. This move coincided with a 1% increase in the S&P 500 index.In the wake of a retaliatory attack in Qatar, traders are growing more confident that the US Federal Reserve will soon lower interest rates.
According to the CME Group’s FedWatch tool, the estimated likelihood that the Fed would keep its current interest rate of 4.25% through November has fallen to 8.4%, down from 17.1% only one week ago. In contrast, the likelihood of interest rates decreasing to 3.75% or lower by November jumped to 53%, up from 38% during the same period.
Speculating that Bitcoin will surge to $110,000 solely based on hopes of de-escalation in the Middle East may be overly optimistic. However, the quick return above $100,000 demonstrates that institutional interest in Bitcoin remains strong, despite global concerns.
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