Bitcoin Demand Subdued Amid Middle East Tensions
Demand for bitcoin has remained subdued since rising tensions in the Middle East escalated on Tuesday, according to an analyst.
CryptoQuant data shows that the Net Taker Volume metric has significantly decreased since Iran fired over 180 ballistic missiles at Israel in response to Israeli attacks on Hezbollah positions in southern Lebanon.
“Buying pressure has remained subdued since the Iran strike,” CryptoQuant analyst J.A. Maartunn told The Block. “The drop in net taker volume by over $150 million signals significant selling pressure, while the fact that it hasn’t exceeded $100 million since Tuesday suggests a lack of strong buying momentum.”
Bitwise Head of Research – Europe André Dragosch noted a negative trend in net buying volumes on bitcoin spot exchanges over the past three days. However, he pointed out signs of short-term seller exhaustion, citing an increase in long bitcoin futures liquidations—the highest since August 5, when bitcoin hit its recent low.
“Moreover, short-term holders have sent the most bitcoins at a loss to exchanges since the lows in August,” Dragosch explained. He added that sentiment has shifted from relatively high to more neutral levels, according to the Bitwise Cryptoasset Sentiment Index.
Dragosch observed Glassnode data revealing that the illiquid supply of bitcoin recently reached an all-time high, while the supply categorized as highly liquid has dropped to a year-to-date low, indicating a shift in market dynamics.
Bitwise Research Analyst-Europe Ayush Tripathi pointed to an increase in the supply of bitcoin held by long-term holders—investors who have held their bitcoin for at least 155 days—despite the recent price decline. This increase suggests confidence in bitcoin as a long-term investment, even as short-term demand has weakened.
Despite sluggish demand, QCP Capital analysts believe the downturn is temporary. They highlight the strong correlation between cryptocurrencies and U.S. stocks, predicting that as equities recover, crypto markets will follow suit.
“Macroeconomic factors, particularly in the U.S., are currently driving the price of risk assets,” they said. The analysts pointed to the latest U.S. ADP National Employment report that showed stronger-than-expected job growth in September as a sign of labor market strength, potentially encouraging the Federal Reserve toward a more dovish stance on interest rates.
“The ADP payroll report beat expectations, and tomorrow’s non-farm payroll report will be key in confirming a strong U.S. labor market. A combination of expected rate cuts and labor strength could boost risk assets,” QCP Capital analysts added.
On Thursday, as investors awaited potential Israeli responses to Iran’s missile strikes, bitcoin held just above the $60,000 mark, while Ethereum dropped below $2,400. Bitcoin’s price fell by 2.8% in the past 24 hours, sitting at around $60,286 at 12:30 p.m. ET, according to The Block’s Bitcoin Price Page.
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