After slumping for three consecutive days, the top 10 cryptocurrencies by market cap turned green on Friday, posting minor gains in the past 24 hours. Dogecoin led the pack with a nearly 4% intraday jump, and major altcoins, along with Bitcoin, have halted their losing spree.
At press time, Bitcoin was up about 2% in 24 hours, trading around $61,500. Ethereum remained under $2,400, gaining 1% day-on-day.
XRP, which lost over 11% on Thursday following the SEC’s decision to challenge a US court’s ruling in favor of Ripple Labs, demonstrated resilience. The token continues to trade around $0.52, posting minor gains.
Following Iran’s unprecedented missile attack on Israel earlier this week, which led to an abrupt escalation of the already tense situation in the Middle East, the broader crypto and stock markets slumped.
The gains made after last month’s FOMC meeting, where a 50-basis-point Fed rate cut was announced, quickly eroded. Bitcoin, after struggling to break stiff resistance at $65k, lost around 7% in the first three days of October.
Fear of a Bigger Crypto Market Crash Remains
The situation in the Middle East remains volatile. In retaliation to Iran’s attack on Israel’s military establishments, Israel claimed to have bombed the center of Beirut and targeted Hezbollah operatives in southern Lebanon.
While UK Prime Minister Keir Starmer released a statement affirming the UK will do everything possible to de-escalate the situation, Iran’s supreme leader, Ayatollah Khamenei, justified the October 7 attack on Israel, lauding the banned Palestinian terror outfit Hamas.
As the situation is volatile, the fear of the war spilling over into the region remains. Any US involvement could drastically impact the crypto markets. Given President Biden’s clear stance in supporting Israel, the possibility of US involvement cannot be ruled out if the situation worsens.
Additionally, Iran’s friendly relations with Russia could further complicate matters. If the two superpowers clash—or even if such a situation arises—it could hurt investor confidence in risk-on assets like crypto.
For Bitcoin, which has shown some resilience on Friday, holding above the $60k mark, any adverse news could trigger a sharp downward movement. The leading cryptocurrency could shed at least another 3-4% and drop to $57k levels.
US Election Results Could Make It Worse
Let’s not forget the upcoming US presidential election in November. Donald Trump, who has positioned himself as a pro-crypto candidate, is trailing Kamala Harris by just one point on Polymarket.
The former president has managed to close the gap as Kamala lost some of the gains she made after the first presidential debate last month.
The tension in the Middle East has shifted the focus of global media temporarily away from the presidential election. However, it will be important to watch how the current US political administration reacts to the rising geopolitical tensions.
This could also impact the prospects of the Republican pro-crypto candidate Donald Trump. If Trump’s chances of victory diminish, it could negatively affect the crypto market.
All in all, the political uncertainty in the US, combined with the volatile situation in the Middle East, will make it difficult for the crypto market to attract fresh funds from investors. As a result, the fear of a bigger crash remains.
