The weekend did not go as expected. The attack on Israel by Iran, which occurred overnight between Saturday and Sunday, had a noticeable impact on the crypto market. This led to Bitcoin and Ethereum dropping by 8% and 12% respectively by Sunday. We believe this was largely due to unjustified panic across the market.

However, the market has now stabilized, with both Bitcoin and Ethereum returning to their pre-attack levels, though they still trade slightly lower than last Friday. This quick recovery likely resulted from several factors: the initial overreaction drove prices down too far, but the approval of the first Bitcoin and Ethereum spot ETFs in Hong Kong, along with the upcoming Bitcoin halving in just five days, helped buoy the market. As noted in Crypto Moves #22, the halving event is garnering more attention than the previous three, suggesting an uptick in Bitcoin purchases as the event nears. The Coinbase Premium Index for both Bitcoin and Ethereum showed a significant premium this weekend, indicating that retail investors and US institutions were buying the dip.

With this in mind, we remain optimistic about the market’s short-term prospects. However, it is important to be cautious as ongoing tensions between Iran and Israel could lead to further declines, especially if Israel responds to the attack. This remains a significant risk.