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Bitcoin's Instability Volatility

Geopolitical tension is causing volatility in crypto markets, but are investors ready to buy back in?
Jack Inabinet Jack Inabinet Apr 19, 20242 min read
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market analysis Bitcoin's Instability Volatility

Bouncing Back? Deepening geopolitical tension between Iran and Israel turning violent in the Middle East is leading to volatility for investors across the board, including in crypto markets. How did markets respond to the latest event, and is war the only thing on traders’ minds?

The strike hit news wires at approximately 9 PM EST, and markets began exhibiting extreme volatility thereafter. Bitcoin tumbled on the increasing prospects of a broader conflict for a second time, falling over 6% and briefly wicking below key $60k support.

Many have held BTC in high regard as a store of value and flight to safety, but last night’s price action caused the coin to decouple from precious metals and correlate heavily with broader risk assets, like the S&P 500, challenging these perceptions.

Many on Crypto Twitter declared the recent lows as a massive gift, predicting that last night's price levels will seem heavily discounted within just a few weeks; the prices of risk assets did indeed rebound yesterday, proceeding to gain nearly 10% off the lows after the immediate dangers of further escalation diminished.

Prices continued on their upward trajectory until shortly after the cash open of US stock markets before proceeding to fall throughout the US trading session.

While the Fear and Greed Index is bordering on extreme fear at the moment, volatility continues to remain suppressed in markets. Despite yesterday’s movement having the S&P 500 tied for the 5th longest streak of negative 1-day returns, realized volatility has been notably absent.

 The VIX (a measure of the options volatility on the S&P 500) managed to briefly break above $20 last night, but has yet to trade above this key resistance level during the open of cash markets.

Technically, markets are heavily oversold, and should volatility continue to remain suppressed, it is highly likely that markets will continue to rebound from here, however, the possibility that volatility could soon unclench and drag markets down with it poses a major risk for bulls.

Notable crypto trader Ansem is retaining his bullish outlook for the moment, but conceded that a convincing loss of BTC’s $60k support level would lead him to reassess this bias.

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Jack Inabinet

Written by Jack Inabinet

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Jack Inabinet is a Senior Analyst with a passion for exploring the bleeding edge of crypto and finance. Prior to joining Bankless, Jack worked as an analyst at HAL Real Estate where he conducted market research and financial analysis for commercial apartment development and acquisition activities in the Seattle region. He graduated from the University of Washington’s Michael G. Foster School of Business and remains based out of the Seattle area.

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