- A crypto market crash is possible as the Iran war changes.
- Iran has threatened to continue attacks with the goal of pushing oil prices higher.
- Bitcoin has formed weak technicals, pointing to more downside.
The crypto market has been relatively calm in the past few days, even as the Iran war has continued. Bitcoin (BTC) has held steady in a narrow range between $60,000 and $70,000, while Ethereum remains above $2,000. This article explores why a crypto crash is more likely to happen than a crypto rally.
Crypto Market Crash Likely as Iran War Takes New Turn
There is a possibility that crypto prices will crash in the near term now that the Iran war has taken a new turn. In a statement on Wednesday, Trump said that the war was almost over. He noted that the bombing campaign lacked sufficient targets and signaled that the war may end later this month.
In theory, signs that the war will end soon should be bullish for cryptocurrencies and stocks. However, the stock market ended in the red, with the Dow Jones Industrial Average falling 290 points.
The main reason is that the war has taken a new turn, with Trump no longer determining its outcome. In a statement on Wednesday, Iran noted that it would shift its strategy from reciprocal attacks to continuous strikes, with the end goal of pushing oil prices to $200 a barrel.
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Iran hopes that higher oil prices will prevent future attacks on its country. This explains why prices jumped to $100 on Thursday despite the International Energy Agency (IEA) recommending the release of 400 million barrels from strategic oil reserves.
Iran also has the incentive to continue attacking oil infrastructure in the region until its conditions are met. The conditions for a ceasefire with the US and Israel are the recognition of its legitimate rights, repatriation for the ongoing destruction, and firm international guarantees against future aggression.
Therefore, there is a risk that the war could go on for months, leading to major damage to the United States, Iran, and Israel. A prolonged war will lead to higher inflation, making it hard for central banks to cut interest rates.
Bitcoin Price Action is Sending Signals of a Potential Crash
Technicals also suggest that the crypto crash may happen soon. As the chart above shows, Bitcoin price remains below all moving averages and the important resistance level at $74,400, its lowest level in April last year. It has also formed a large bearish flag pattern. Ethereum has also formed a similar pattern.
Therefore, there is a risk these coins will have a bearish breakout, with Bitcoin falling to $60,000 or lower. If this happens, the broader crypto market is likely to crash, as Bitcoin is often the most important catalyst.
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