The crypto market took a major hit in the last 24 hours. Bitcoin fell below $60,000 while altcoins dropped between 30%-50%. This was an extremely rough time for crypto investors. According to analyst Ash Crypto, the reason behind this crash was the Iran drone attack on Israel. During times of war, commodities like oil and gold increase in value, leading to high inflation. High inflation means interest rates are less likely to be cut.
Lower interest rates are good for stocks and crypto. So when people expect inflation to rise due to a war, they sell crypto assets, leading to the crash we saw yesterday. As Bitcoin and altcoins started dropping, investors with leveraged positions got liquidated, forcing them to sell more crypto. This caused even more downward price pressure.
We saw a similar panic selloff during the Covid outbreak in March 2020 and the Russia-Ukraine war. But in both cases, the crypto market rebounded within a month after the initial crash. Rumours suggest Iran gave advance warning of the drone attack to allied countries and groups. This allowed certain players to prepare and take advantage of the upcoming crypto dump.
They likely waited until the weekend when trading volume is lower. Then they started selling, crashing the market. As prices fell, these groups bought up crypto at discounted rates, as they typically do after engineering selloffs. The key takeaway is to avoid leveraged trades which can get liquidated during volatility. Sticking to spot holdings is the safest approach to maximize gains while limiting risk.
The Post-Crash Rebound In Bitcoin Market
Currently, Bitcoin is back above $66,322.37 with strong support around $60,000. If $60,000 doesn’t hold, analysts expect the next major support around $56,000-$58,000 where new institutional investors from ETF purchases accumulated positions.
Whereas the recent news that the Hong Kong Securities and Futures Commission has approved Hong Kong Bitcoin and Ethereum spot ETFs boosted the rebound in the crypto market, as Bitcoin rose by 3% just after the news. Nevertheless, it is obvious that after every black swan event disrupting crypto, the market has seen huge rallies in the following period. Crypto veterans expect the same explosive upside after this latest shake-up.
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