Important takeouts:
Bitcoin quickly rebounded to $106,000, signaling demand for institutional investors at the company despite growing global uncertainty.
The sharp drop in Bitcoin’s hashrate by 8% has sparked concerns over the stability of mining amid the Middle East tensions.
Bitcoin (BTC) regained its $106,000 level on Monday after temporarily soaking under $98,500 on Sunday. This is my first time in 45 days. Market anxiety has eased after US President Donald Trump announced a “complete ceasefire” between Israel and Iran. Traders are currently considering whether Bitcoin can push towards $110,000 or whether downside risk is still there.
Despite the volatility, the Bitcoin derivatives market remained stable. The price movement amounts to 0.3% of open interest on total futures, with a bullishly utilised $193 million clearing of Bitcoin positions. The current $68 billion leveraged position has not changed in effect since Saturday.
A 4.4% drop in Bitcoin’s price over a 12-hour period is not particularly wary of historical standards. Three similar drawdowns have occurred in the last 30 days. Still, some traders are worried that the possibility of long-term conflict in Iran will weigh heavily on the global economy and will encourage them to adopt a more cautious and risk-averse attitude.
Has Bitcoin Miners been affected by the Middle East conflict?
Some analysts have noticed a significant decrease in the hash rate for Bitcoin. Between Sunday and Thursday, the hash rate fell by 8%, down from 943.6 million Th/s to 865.1 million Terrahash (Th/s) per second. This sparked speculation about potential disruptions over local mining operations.
Some industry analysts have long speculated that unauthorized mining operations in Iran could draw up to 2 gigawatts of electricity, but these claims have been largely untested.
Due to the lack of transparent data, it is almost impossible to accurately estimate how much mining capacity exists within Iran. However, analysts emphasized that sudden, sharp drops in hashrates are not necessarily unusual.
Daniel Batten, for example, noted that such fluctuations are often linked to temporary cuts in electricity production in the United States. During extreme weather conditions, Bitcoin miners often face strong incentives to temporarily suspend operations.
The recent incident occurred on April 22, when Bitcoin hashrate plummeted 27% after a fierce storm in Texas and Oklahoma. These weather phenomena included heavy rain, large h-wings and at least 17 confirmed tornadoes, all of which destroyed local energy grids, resulting in mining activities.
Confident traders due to Fed interest rate reduction
Meanwhile, oil prices fell on Monday after peaking at $77 on Sunday. This move coincided with a 1% gain on the S&P 500 index. After the retaliation attack in Qatar, traders are increasingly betting on the possibility that the US Federal Reserve could cut interest rates in the short term.
Related: Missiles fly, but Bitcoin holds, revealing the strength of BTC in global chaos
According to CME Group’s FedWatch tool, the implicit probability that the Fed will maintain its current 4.25% interest rates until November fell to 8.4% from 17.1% just a week ago. In contrast, the probability of falling below 3.75% by November increased from 38% to 53% for the same period.
It may be too early to bet that Bitcoin will surge to $110,000 on hopes of de-escalation in the Middle East alone. However, a rapid rebound of over $100,000 suggests that institutional interest in Bitcoin remains robust even amidst global tensions.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
