- Oil price volatility and wider market tensions have been tugging at Bitcoin, still the risk-on asset
- Short-term price action will see Bitcoin gravitate towards local liquidity clusters
Bitcoin [BTC] was down 1.16% while Ethereum [ETH] shed 2.79% of its value in the 24 hours, at the time of writing, in the face of geopolitical tensions and macroeconomic uncertainty. U.S President Donald Trump demanding an “unconditional surrender” from Iran and threatening its leader while calling him an “easy target” did little to shore up market confidence.
The volatility around oil prices, which again hinged on the situation in the Middle East, also had an impact on the economy. Rising energy costs can reduce consumer purchasing power, for example, and could impact crypto in the long term.
Here, it’s worth pointing out that the “extreme greed” crypto sentiment in May has settled down to more neutral levels. The Fed’s rate decision on 18 June appeared to be priced in too, with the market expecting a 99.9% chance of no rate cuts.
On-chain metrics also showed that long-term holders have continued to accumulate. However, given the growing fears of a U.S military intervention in the Iran-Israel conflict, the crypto market will remain precariously poised. At least in the short term.
Why is crypto down today? Liquidity sets the stage for volatility
Source: BTC/USDT on TradingView
As always, the price is drawn to liquidity. Over the past month, Bitcoin has settled into a consolidation phase. Lacking a strong trend, BTC has been driven by news updates, while also being reactive to tweets. For example – The public fallout between Elon Musk and Donald Trump on Friday, 13 June.
These violent moves were followed by quick reversals. Marked by the arrows, they were a clear sign of the price being drawn to magnetic zones.
At the time of writing, the monthly open at $104.6k was a key support level. A daily session close below $104k-$104.5k would suggest a move towards $102k or $100k may be nearby.
Source: TOTAL2 on TradingView
The altcoin market has also been in a bearish phase. It has been unable to climb past the $1.24 trillion mark. Using price action concepts, the region was a bearish order block from February (red box). Given the weak ETH/BTC ratio and the hike in Bitcoin dominance, altcoin investors will need patience.
Some sectors and certain coins have short periods where they outperform the wider market. Traders could be on the lookout for these opportunities, but should be wary of holding these assets too long.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
