Under the "turn-based" geopolitical conflict, the encryption market welcomes the "Halving" with a big dump?

Originally written by Frank, Foresight News

“When the cannon goes off, ten thousand taels of gold”?

At about 9:00 a.m. today, with the breaking news of “a strong explosion near Tehran, the capital of Iran” and “explosions from Iran, Syria, and Iraq” occupied the front page headlines, the situation in the Middle East under the “turn-based” back and forth between Israel and Iran was tense again, and the price of gold quickly exceeded $2,400, soaring pump for five consecutive weeks.

At the same time, Bitcoin, which was previously regarded as “digital gold”, went the opposite way, falling below the integer mark of 63,000 USDT, 62,000 USDT and 61,000 USDT, and once fell below 60,000 USDT, and the lowest fell to the recent low of 59,587 USDT (OKX Spot data, the same below); Ethereum also falls below 3,000 USDT and 2,900 USDT in the same period, and the lowest touched 2,864 USDT.

Coinglass data shows that in the past 4 hours, the entire network Get Liquidated more than 100 million US dollars, of which long order Get Liquidated 94.57 million US dollars, and the altcoin market is even more wailing, and 50% Slump abound in the past half a month.

Quite dramatically, as of the time of writing, OKLink data shows that it has been less than 22 hours since the fourth Halving of Bitcoin, but the market has poured cold water on everyone in a posture of “asset Halving in advance”, making market expectations more and more pessimistic. **

Whether the current round of falls is a trend reversal or a medium-term pullback has become the key for everyone to participate in the next market trend.

The reason for the big dump is geometric

Briefly summarize the reasons that may promote the sharp fall of the round, which should be mainly divided into two dimensions: internal and external, including factors such as the agitation of geopolitical conflicts, the collective hawkish turn of the Federal Reserve, and the internal inducements of ETF capital outflows.

The impact of the conflict in the Middle East on global financial markets

First of all, we need to make it clear that since the institutional strides into the game last year, especially after the passage of the Spot ETF at the beginning of this year, the Bitcoin’s “safe-haven asset” attribute has actually become a kind of metaphysics, and it is essentially a “risk asset”** - more closely related to the global macro environment and the bull bear cycle (recommended reading: “”“When the cannon goes off, gold is ten thousand taels”? encryption investment guide under geopolitical turmoil).

And this round of conflict between Iran and Israel has to some extent exacerbated the possibility of geopolitical risks in the Middle East dragging down global oil supply - just after the latest news of the conflict came out this morning, the price of US WTI crude oil futures pump more than 2.5% during the day, once standing at $85 / barrel, and the price of Brent crude oil futures also reached the highest pump more than $89 / barrel.

If the conflict expands and even involves the nuclear facilities of both sides, it may cause oil prices to continue to pump, which will undoubtedly make the anti-inflation process in the United States worse, and then push up the possibility fall that the Fed will choose to continue to raise interest rates in the future Bitcoin.

At the same time, this has also made the recent rumors about the US stock market full of doubts - affected by this morning’s news, the three major US stock index futures falls widened, the Nasdaq 100 index futures falls more than 2%, the S&P 500 index futures falls 1.5%, and the Dow futures falls 1.32%.

The Fed’s overall tone has turned hawkish

In addition, in the past two months, the market’s original expectations for the Fed to pivot to interest rate cuts in the middle of this year have been significantly shaken, mainly because increasingly long Fed senior officials have begun to mention “raising interest rates”:

First, the “Fed three-in-command”, New York Fed President Williams warned that the Fed will raise interest rates if the data shows that the Fed needs to raise interest rates to achieve its goal; Atlanta Fed President Bostic also said that he is open to raising interest rates if US inflation rises.

More critically, in Powell’s speech this week, he also said that the lack of further progress on inflation may be appropriate for higher Intrerest Rates to work for a longer period of time, and Wall Street Journal reporter Nick Timiraos, who has always been regarded as the “new Fed news agency”, commented that the Fed’s outlook has changed significantly, which seems to have shattered their hopes that they may “preemptively” cut interest rates.

You must know that at the end of last year and the beginning of this year, the market expected the Fed to cut interest rates 5-7 times in 2024, and the first rate cut in March…**This also prompted US Treasury yields to soar again, and the 10-year yield broke through the 4.75% mark, and Wall Street investment banks even warned of a short-term or “return to the 5% era”.

At the same time, a series of financial-related data in the United States have been released intensively since April, including retail sales data, as well as initial jobless claims, non-farm payrolls data, etc., all of which have performed strongly, regardless of credibility, at least from the data dimension, once again providing shorter for interest rate hikes.

**In this context, it is reasonable for some risk funds to adjust their positions. **

ETF funds have had a net outflow for 5 consecutive days

In addition, there is a signal to watch out for - according to SoSoValue data,** the total net outflow of $23.15 million on April 18 Bitcoin Spot ETF, which has been a net outflow for the fifth consecutive day. **

As of the time of writing, the total net asset value of Bitcoin Spot ETF was US$52.41 billion, the ETF net asset ratio (market capitalization ratio to the total market capitalization of the Bitcoin) reached 2.82%, and the historical cumulative net inflow reached US$12.24 billion.

It is particularly worth noting that ** At present, Ethereum has taken the lead in falling to near the 120-day line, and the weekly line of BTC/ETH is also three consecutive negatives, which is extremely ugly in shape. **

You must know that the 120-day line has always been regarded as one of the most important bull and bear dividing lines, so whether Ethereum can hold this trend line and rebound strongly, and the subsequent performance of Bitcoin, is particularly critical. **

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