Market Deep Dive: Geopolitical Tensions, Economic Indicators, and Cryptocurrency Trends


The Iranian attacks on Israel last Saturday evening caused a sell-off in the cryptocurrency market, with BTC falling from highs of around USD 68,000 on Saturday morning to around USD 60,500-61,000 on the major exchanges before retracing with high volatility to levels around USD 64,000 on Sunday. Due to the heavy liquidation, many of the major exchanges dipped slightly below USD 60,000, where nearly USD 1 billion was liquidated in a 4-hour window with leveraged longs of USD 700 million. Monday morning began with a bullish candle, with Asian investors buying the dip and BTC peaking just below USD 67,000 at lunchtime.


However, with ongoing tensions in the Middle East and better-than-expected US retail sales (which boosted growth estimates and continued to raise inflation expectations, reducing the likelihood of rate cuts), the market continued its bearish stance into the current support area below USD 60,000 on Wednesday. Accordingly, with negative funding rates and a lot of short-term bearish sentiment for risk assets, this was a good setup for an upside squeeze that saw BTC reach levels above USD 64,000, before falling back to levels above USD 59,600 overnight in the Asia session on reports of Israeli strikes on Iran. It is currently trading at around USD 63,000.


My short-term bullish bias from last week turned out to be wrong, and risk assets/cryptocurrencies seem to need a few more weeks/months to recover, especially as I believe that the postponement of rate cuts by the FED is still not fully priced in and has been overshadowed by the tensions in the Middle East. Despite the tensions, a further 5-10% dip for equities and 10-20% for BTC seems healthy before another leg up after the strong rally since 2023. On the downside, the first support level for BTC is USD 59,500 with USD 60,000 as the main psychological barrier (quickly breached). However, if the bearish sentiment persists, the next support level to be examined is USD 58,500, and if this is breached, we could see a major drop towards the USD 50,000-53,000 level. On the upside, I still see potential for further short squeezes, with the first resistance at USD 65,000 (one is happenig just now in my opionion), then USD 67,000, followed by USD 68,000. Additionally, I do not think that tomorrow’s BTC halving will have a bullish influence in the short term – or at least it will be overweighed by the current bearish geopolitical and macro indicators.


ETH and altcoins have dropped even more, but I am convinced that most alts will bottom before BTC. ETH currently has strong support around USD 2,850, then USD 2,700, from where it can go to USD 2,300 quite quickly. On the upside, it needs to clear USD 3,200 first, and the next resistance level would then be USD 3,400.


The 30-day BTC ATM implied volatility rose from 66.4% to 68% (+1.6% WoW), while the 30-day ETH ATM implied volatility fell from 70% to 67.5% (-2.5% WoW). Looking at the 25-delta skew, it is now negative for BTC for timeframes between 0-60 days and for ETH between 0-90 days, confirming the medium to near term bearishness. Once again, the 25-delta skew has been a good short-term indicator for the market direction.
On the macro side, EUR CPI (YoY) on Wednesday came in line with forecasts, while US job and manufacturing data were stronger than expected.


Key economic events next week will be US PMI data on Tuesday, preliminary US GDP Q1 (QoQ) data and the BoJ interest rate decision on Thursday, and US Core PCE Price Index data will be released on Friday, providing insight into the current inflation conditions.


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