Escalating conflict in the Middle East has taken a heavy toll on the global cryptocurrency market, plunging total market volume by over 12 per cent over the last 24 hours to $81.11 billion.
The crash in the market volume has brought the global cryptocurrency market cap to $2.11 trillion on Friday, close to a 1 per cent decline from the previous day and a massive 30 per cent fall from its all-time high of $3 trillion.
Prices of Bitcoin, the lead cryptocurrency, fell close to 7 per cent in the last one week since the crisis saw a sudden flare-up, to $60,750 in morning trading hours on Friday.
Market experts said a further plunge might be ahead, considering the current market volatility.
The overall market fall, however, has brought Bitcoin’s dominance to close to 57 per cent, a marginal increase of 0.17 per cent over the day.
“The ongoing crisis in the Middle East has derailed Bitcoin’s recovery in September.”
“As for October, historically considered a positive month for the market, Bitcoin has fallen by 4.8 per cent to $60,683 [as of Friday, October 4], with current volatility showing that a further plunge might be ahead,” Ryan Lee, Chief Analyst at Bitget Research, told Arabian Business.
Middle East conflict hits cryptocurrency
Market experts said since (BTC) has grown to become a global asset, its market valuation has been significantly impacted by global events.
They said the cryptocurrency market has seen a very intense liquidation over the last few days following the sudden escalation of the ongoing regional conflict in the Middle East.
Market data showed that more than $700 million has been liquidated just in three sessions thus far in October, with BTC taking a sizable chunk of the figure.
“Generally, these liquidations might be considered an avenue for market reset, as most traders were over-leveraged before now.
“However, it might be too early to judge the trend for the rest of the month as most investors are largely reactionary to macro events,” a senior executive with an India-based cryptocurrency exchange said.
Lee said a look at some of this performance data, like the 16 per cent drop in trading volume, shows dwindling sentiment.
“This reaction is explainable, as investors will prefer not to get caught up in a macroeconomic situation that will tie down their capital,” he said.
Institutional investors boost buying
Market participants said despite the general downturn, institutional investors continue to buy digital currency at a rate at par or higher than the quantity mined daily as per data observed on Cryptoquant.
The anticipation for further interest rate cuts by the US Federal Reserve leading to a market rebound is cited for the continued investment interest by institutional investors in the cryptocurrency market.
Currently, BTC has sustained over the $60,000 support level and analysts anticipate the price may fluctuate in the $72,000 range in the coming days and weeks as the flagship cryptocurrency has historically performed well in the fourth quarter of the year, analysts said.
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