Under the "turn-based" geopolitical conflicts, is the crypto market welcoming the "halving" with a sharp decline?
The countdown to the halving is less than 24 hours, and the market seems to be about to experience a wave of "asset price halving."Author: Frank, Foresight News
"Once the cannon fires, gold will be worth a fortune"?
This morning around 9:00 AM, breaking news about "a strong explosion near Tehran, the capital of Iran" and "explosions reported in Iran, Syria, and Iraq" dominated the headlines. The Middle East situation, characterized by a "turn-based" back-and-forth between Israel and Iran, has once again intensified, causing gold prices to quickly surpass $2400, soaring for five consecutive weeks.
Meanwhile, Bitcoin, which was previously regarded as "digital gold," took the opposite direction, consecutively falling below the key levels of 63000 USDT, 62000 USDT, and 61000 USDT, even briefly dropping below 60000 USDT, hitting a recent low of 59587 USDT (OKX spot data, same below); Ethereum also fell below 3000 USDT and 2900 USDT, reaching a low of 2864 USDT.
Coinglass data shows that over the past 4 hours, more than $100 million in liquidations occurred across the network, with long positions liquidated at $94.57 million. The altcoin market is also in despair, with many assets halving in value over the past two weeks.
Dramatically, as of the time of writing, OKLink data shows that there are less than 22 hours until Bitcoin's fourth halving, yet the market has doused everyone with cold water in a "pre-halving asset" manner, leading to increasingly pessimistic market expectations.
Whether this round of decline is a trend reversal or a mid-term correction has become the key for everyone to participate in the upcoming market trends.
Reasons for the Plunge
To summarize the possible reasons for this significant decline, they can mainly be divided into two dimensions: external factors such as geopolitical conflicts and the Federal Reserve's collective hawkish stance, and internal factors like ETF fund outflows.
Impact of Middle Eastern Conflicts on Global Financial Markets
First, we need to clarify that since institutional investors entered the market in large numbers last year, especially after the spot ETF approval earlier this year, Bitcoin's "safe-haven asset" attribute has essentially become a kind of mysticism, and it is more closely related to "risk assets" ------ linked to the global macro environment and bull-bear cycles (recommended reading: "Once the cannon fires, gold will be worth a fortune? A crypto investment guide amid geopolitical turmoil").
The ongoing conflict between Iran and Israel has, to some extent, exacerbated the geopolitical risks in the Middle East, potentially dragging down global oil supply ------ following the latest conflict news this morning, U.S. WTI crude oil futures rose over 2.5% during the day, briefly surpassing $85 per barrel, while Brent crude oil futures also rose above $89 per barrel.
If the conflict escalates and involves both parties' nuclear facilities, it could lead to sustained increases in oil prices, which would undoubtedly complicate the U.S. anti-inflation process and increase the likelihood of the Federal Reserve continuing to raise interest rates. Therefore, Bitcoin, as a "risk asset," seems to understandably decline under the influence of stronger rate hike expectations.
At the same time, this has cast a shadow over the U.S. stock market, which has recently been on edge ------ influenced by this morning's news, the three major U.S. stock index futures have widened their declines, with Nasdaq 100 futures falling over 2%, S&P 500 futures down 1.5%, and Dow futures down 1.32%.
The Federal Reserve's Overall Hawkish Shift
Additionally, over the past two months, the market's previous expectations for the Federal Reserve to shift to rate cuts in mid-year have been significantly shaken, mainly because more and more Federal Reserve officials have begun to mention "rate hikes":
First, "the third-in-command of the Federal Reserve," New York Fed President Williams warned that if the data shows that the Federal Reserve needs to raise rates to achieve its goals, then the Fed will raise rates; Atlanta Fed President Bostic also expressed an open attitude toward rate hikes if U.S. inflation rises.
More critically, in Powell's speech this week, he stated that the lack of further progress on inflation may make it appropriate for high rates to remain in effect for a longer time, and Nick Timiraos, a journalist from the Wall Street Journal, often regarded as the "new Federal Reserve spokesperson," commented that the Fed's outlook has undergone a significant change, seemingly breaking the hope that they might "preemptively" cut rates.
It is worth noting that at the end of last year and the beginning of this year, the market expected the Federal Reserve to cut rates 5-7 times in 2024, with the first cut occurring in March… This has also led to a surge in U.S. Treasury yields, with the 10-year yield breaking through the 4.75% mark, and Wall Street investment banks even warning that the short-term may "return to the 5% era."
Simultaneously, since April, a series of financial-related data from the U.S. has been released, including retail sales data, initial jobless claims, and non-farm payroll data, all showing strong performance. Regardless of credibility, at least from a data perspective, it has once again provided room for rate hikes.
Against this backdrop, it is reasonable for some risk capital to adjust their positions.
ETF Funds Have Net Outflows for 5 Consecutive Days
Additionally, there is a signal worth noting ------ according to SoSoValue data, the Bitcoin spot ETF had a total net outflow of $23.15 million on April 18, marking five consecutive days of net outflows.
As of the time of writing, the total net asset value of Bitcoin spot ETFs is $52.41 billion, with an ETF net asset ratio (market cap relative to Bitcoin's total market cap) of 2.82%, and a historical cumulative net inflow of $12.24 billion.
Notably, Ethereum has already dipped near the 120-day moving average, and the BTC/ETH weekly chart has shown three consecutive bearish candles, indicating a very poor pattern.
The 120-day moving average has always been regarded as one of the main dividing lines between bull and bear markets, so whether Ethereum can hold this trend line and rebound strongly, as well as Bitcoin's subsequent performance, becomes particularly critical.
