Bitcoin (BTC) Price Reaction to Middle East Crisis: What to Expect

Key Insights:

• BTC price retreated from the $28,000 resistance on Monday amidst escalating tensions in the Middle East.
• Early reactions have triggered a significant decline in Bitcoin’s new-user acquisition metrics, hitting a four-month low on October 8.
• Bitcoin Dominance (BTC.D) surged past 51%, its highest level since July, emphasizing Bitcoin’s renewed status as a safe haven asset.

Bitcoin (BTC) price dipped below the $28,000 mark on Monday as global markets reacted to escalating tensions in the Middle East. On-chain data highlights the contrasting signals regarding Bitcoin’s status as a safe haven asset and its potential BTC price movements in the weeks ahead.

Bitcoin BTC) price wobbled below $28,000 on Monday as global markets began reacting to the Middle East tensions. On-chain data examines the conflicting signals surrounding Bitcoin’s safe haven credentials and how it could impact prices in the weeks ahead.

Bitcoin (BTC) price retraced from the $28,000 level on Monday as tensions heightened in the Middle East. Early clues from on-chain data trends signal how Bitcoin price could react mid-to-long term.

Number of New Investors Buying Bitcoin Dips to 4-Month Low

On October 8, Bitcoin recorded its lowest number of daily new wallet addresses in four months. The escalating tensions in the Middle East appear to be the major driver behind this decline in new investors adopting Bitcoin.

Only 367,874 New BTC Wallets were created on October 8. And according to the Glassnode chart below, that figure had not dropped this low since July 22, 2023. 

Also called Network Growth, the New Addresses metric assesses the current rate at which a blockchain protocol is attracting new users.  A sharp decline in new addresses, as observed above, is often bearish. It implies that the native coin could struggle to attract fresh demand in the weeks ahead  

Referencing the crisis in the Middle East, this decline in Bitcoin Network Growth indicates that non-crypto native investors are currently opting for more familiar safe-haven assets and commodities, such as Gold, as economic uncertainty looms. 

Bitcoin price currently holds a relatively high support, around $27,000. But, if this current trend of network growth decline persists, it could weaken market demand in the days ahead.

Bitcoin Price Prediction: Consolidation Above $26,000

Bitcoin (BTC) is presently trading at $27,500. and the Bollinger Bands in the daily time frame are currently contracting, indicating a period of consolidation and reduced price volatility.

This contraction suggests that Bitcoin is trading within a relatively narrow range. The upper Bollinger Band is at $28,158.23, serving as a significant resistance level. 

A decisive breakout above this upper band could signal a bullish trend reversal, potentially targeting higher price levels at $28,700.

On the downside, the lower Bollinger Band is at $27,367.40, acting as an essential support level. It represents a potential point of interest for buying activity, as it aligns with the lower boundary of the current trading range.

However, if the bulls lose this support, a breakdown toward $26,000 could be on the cards.