Two weeks into the ongoing conflict in the Middle East, the price of bitcoin has surprisingly increased, defying expectations given the escalating tensions. On Saturday morning, the cryptocurrency was valued at $71,000, experiencing a minor decline of 0.7% over the past 24 hours. This slight setback followed the U.S. military’s bombing of military targets on Kharg Island, a critical crude export facility in Iran. While bitcoin reached a high of $73,838 on Friday, the market exhibited remarkable stability, with the price retracting only 3.5% in response to the news from Kharg Island.
The past week has showcased the resilience of bitcoin, which saw a 4.2% increase over the last seven days. Other cryptocurrencies also performed favorably, with Ether rising by 5.5% to reach $2,090, Dogecoin gaining 5%, Solana climbing 4.2% to $88, and BNB increasing by 4.5% to $655. In fact, all major cryptocurrencies are in the green for the week, despite the intensifying war.
Market reactions to the conflict have evolved over time. Initially, headlines spurred dramatic sell-offs, as traders struggled to price the associated risks. However, it appears a new trading framework is emerging. The pattern is increasingly predictable: military actions provoke oil price surges and initial dips in bitcoin, but the cryptocurrency tends to recover rapidly. This new approach indicates a fading of the once reflexive response to sell on bad news. Nevertheless, the resistance level for bitcoin remains evident, with the $73,000-$74,000 range having rejected the price on four occasions in just two weeks.
Recent comments from former President Donald Trump regarding Kharg Island have introduced additional uncertainty into the market. In a post on Truth Social late Friday, he indicated that he had spared oil infrastructure for “reasons of decency,” yet he would “immediately reconsider” if Iran continued blocking the Strait of Hormuz. Iran’s response has been one of defiance, warning that any attack on energy facilities would lead to retaliatory strikes on U.S.-linked establishments in the region. This represents a new escalatory threat that could severely disrupt oil supply—already identified by the International Energy Agency as facing the largest disruption in history.
In the latest trading activity, $371 million in liquidations occurred within 24 hours, reflecting the volatility of Friday’s session. Short liquidations outpaced long positions at $207 million versus $163 million, demonstrating the rapid shifts in market sentiment. The initial surge to $73,800 had squeezed short sellers, but the subsequent news from Kharg Island forced longs to exit.
Looking ahead, all eyes are now set on the Federal Reserve meeting scheduled for March 17-18. Rising oil prices above $100, the unprecedented energy supply disruption, and the ongoing war create a challenging scenario for economic stability, further complicating the discussion surrounding stagflation. Current predictions indicate a 95%+ probability of holding interest rates at 3.5% to 3.75%. However, the dot plot and statements from Chairman Jerome Powell will likely take precedence over the decision itself. Any indication that rate hikes might resurface could negatively impact risk assets, including the struggling cryptocurrency market that has been eagerly anticipating rate cuts that have yet to materialize.
