Key takeaways:
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Bitcoin swiftly rebounded to $106,000, signaling firm institutional investor demand despite growing global unrest.
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A sharp 8% drop in Bitcoin’s hashrate raised concerns over mining stability amid Middle East tensions.
Bitcoin (BTC) reclaimed the $106,000 level on Monday after briefly dipping below $98,500 on Sunday — the first time in 45 days. Market anxiety eased after US President Donald Trump announced a “total ceasefire” between Israel and Iran. Traders are now weighing whether Bitcoin can push toward $110,000 or if downside risks still linger.
Despite the volatility, Bitcoin’s derivatives market remained steady. The price move triggered $193 million in liquidations of bullish leveraged Bitcoin positions, equivalent to 0.3% of total futures open interest. The current $68 billion in leveraged positions is virtually unchanged from Saturday.
The 4.4% drop in Bitcoin’s price over a 12-hour period is not particularly alarming by historical standards. Similar drawdowns have occurred three times in the last 30 days. Still, some traders worry that the potential for a prolonged conflict in Iran could weigh heavily on the global economy, prompting investors to adopt a more cautious, risk-averse posture.
Were Bitcoin miners impacted by conflict in the Middle East?
Some analysts noticed a significant decline in Bitcoin’s hashrate. Between Sunday and Thursday, the hashrate dropped by 8%, falling to 865.1 million terahashes per second (TH/s) from 943.6 million TH/s. This sparked speculation about potential disruptions to mining operations in the region.
Some industry analysts have long speculated that unauthorized mining operations in Iran could be drawing as much as 2 gigawatts of electricity, though these claims remain largely unverified.
Accurately estimating how much mining capacity exists within Iran is nearly impossible due to the lack of transparent data. However, analysts emphasized that sudden and sharp drops in hashrate are not necessarily unusual.
Daniel Batten, for example, pointed out that such fluctuations are frequently tied to temporary reductions in electricity output within the United States. During periods of extreme weather, Bitcoin miners often face strong incentives to temporarily shut down operations.
A recent case occurred on April 22, when Bitcoin’s hashrate plunged 27% following intense storms in Texas and Oklahoma. These weather events included heavy rain, large hail, and at least 17 confirmed tornadoes, all of which disrupted the local energy grid and, consequently, mining activity.
Traders more confident on Fed interest rate cuts
Meanwhile, oil prices tumbled on Monday after peaking at $77 on Sunday. This move coincided with a 1% gain in the S&P 500 index. Following a retaliatory attack in Qatar, traders increasingly bet on the likelihood that the US Federal Reserve (Fed) will lower interest rates in the near term.
Related: Missiles fly, yet Bitcoin holds, revealing BTC’s strength in global chaos
According to the CME Group’s FedWatch tool, the implied probability that the Fed will maintain its current 4.25% interest rate through November has dropped to 8.4%, down from 17.1% just one week earlier. In contrast, the odds of rates falling to 3.75% or lower by November increased to 53%, up from 38% over the same period.
Betting that Bitcoin will surge to $110,000 solely on the hope of de-escalation in the Middle East may be premature. However, the swift rebound above $100,000 suggests that institutional interest in Bitcoin remains firm, even amid global tensions.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.