Bitcoin (BTC) declined by 8.3% between Sept. 30 and Oct. 1, reaching a two-week low of $60,207. Despite a modest recovery to $61,300 on Oct. 2, Bitcoin’s price remains 16.6% below its March 2024 all-time high, whereas gold and the S&P 500 are each within 2% of their recent record levels.
Given Bitcoin’s underperformance, one might expect traders to adopt a bearish stance; however, BTC derivatives metrics suggest otherwise. Some analysts argue that socio-political uncertainties could negatively impact its short-term price. Historically, Bitcoin tends to outperform other asset classes following major events, indicating potential resilience despite current market pressures.
Bitcoin vs. gold and S&P 500 returns after geopolitical events. Source: BlackRock
On Sept. 17, BlackRock published a report titled “Bitcoin: A Unique Diversifier,” highlighting that BTC’s fundamentals differ from traditional assets. The asset manager emphasized Bitcoin’s scarcity and decentralization as unique features and advised clients to view it as a “flight to safety option in terms of fear and around certain geopolitically disruptive events.”
Tensions in the Middle East intensified after Iran launched ballistic missiles at Israel on Oct. 1. According to CNBC, the attack was in retaliation for Israeli ground forces entering southern Lebanon to target an Iran-backed militant group. US National Security Advisor Jake Sullivan reportedly described the recent actions as “a significant escalation by Iran.”
Market uncertainty, which adversely affected Bitcoin’s price, was also fueled by the upcoming US presidential elections in November. Democrat Tim Walz and Republican JD Vance participated in the vice-presidential debate on Oct. 1, but the event did little to alter the trajectory of an exceptionally tight election race, according to Reuters.
Additionally, investors adopted a more cautious approach after automaker Tesla reported third-quarter deliveries slightly below market expectations, resulting in a 4% decline in its shares. However, it is noteworthy that Tesla’s stock appreciated by 20% over the past 30 days, driven by the…
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