Bitcoin’s downward reaction to the war does not disarm its bullish thesis.
Bitcoin has the ability to act as a safe haven asset, the analyst highlights.
Financial markets have retreated this week as a result of the war in the Middle East involving Israel, Iran, Lebanon, Hezbollah and other armed organizations. In this way, they temporarily undid part of the upward trend they experienced last month. Although this could prove temporary for some assets like bitcoin (BTC).
“The market has a way of humbling you and keeping you on your toes,” said trader Scott Melker, also known on internet forums as “The Wolf of All Streets.”» (the wolf of all the streets), in a note sent to subscribers to his email list.
Although September is usually bearish for the markets and the following month bullish, this has not currently happened. “Instead of following that pattern, we saw a bullish finish in September followed by a drop to start October,” adds the specialist.
“This was largely due to temporary risk aversion caused by the escalation of the conflict between Israel and Iran,” Melker explains. However, he believes that “that shouldn’t matter in the big picture.” The reason for this is that This is a typical price decline in the event of an unexpected event.but if the fundamentals remain firm it will recover.
“In fact, the geopolitical conflict could be positive for bitcoin if it evolves into the safe haven asset that we hope it will become,” highlights the specialist. This is because, in times of economic uncertainty and political instability, investors often look for assets that maintain value despite this environment.
Historically, gold has functioned as a refuge asset in periods of crisis because it does not depend on a particular economy. It has decentralized mining and a scarce supply, which favors its rise due to demand. Bitcoin, by also having such characteristics, has the ability to offer that protection if its narrative grows like “digital gold.”
Furthermore, the possibility of transferring it digitally and freely at a low cost makes the role of bitcoin favored over gold. Therefore, in a geopolitical conflict it could gain attraction, enabling its upward trend. Since its origin, these attributes have caused its price to reach new all-time highs every four years.
All things considered, “I’m not worried about October,” Melker says. The current decline does not define the historically bullish trend this month will have for the markets, nor in the longer term. To put it in perspective, remember that last month started with poor, bearish price action, but ended as the best September on record.
The rise seen last month has been influenced by interest rate cuts in the United States and China, which increased liquidity, a policy that is expected to continue in the coming months. However, the trader clarifies that “it is crucial to remain cautious, especially when everyone seems to expect the same result.”
Bitcoin should surpass USD 70,000 to regain the bullish trend
Beyond the macroeconomic and political environment, Melker warns that, according to technical analysis, bitcoin should surpass the peak of $70,000 (USD), marked two months ago, the graph shows, to resume the bullish trend.
If it exceeds such a price level, bitcoin would completely break the corrective trend it experienced after its all-time high. registered seven months ago. Precisely, after such a milestone, its price has registered increasingly lower highs and lows until August when it touched USD 49,000.
From such a floor, its price has shown an upward trend, beyond the recent decline. However, it has not yet regained the previous high level, which was $70,000, so that move seems crucial to regaining momentum.
