Bitcoin price fell towards key support levels near $65,000 as US President Donald Trump signaled to the nation that the war in the Middle East would continue for a short, intensive period.
During his address at the White House on Wednesday, Trump said the US military is “very close” to finishing “Operation Epic Fury,” aimed at dismantling Iran’s nuclear and naval capabilities.
However, he added a stern warning that the US would ”hit them extremely hard over the next 2 to 3 weeks” to ensure a decisive conclusion to the conflict.
As an immediate reaction to the escalation, crude oil rose to over $100 a barrel, once again highlighting investor concerns over supply disruptions in the Strait of Hormuz.
Stocks, crude oil, and crypto prices have experienced extreme volatility over the past few months.
As previously reported by Invezz, while market tensions eased on Tuesday after Trump said the war would be coming to an end, his recent rhetoric has once again stoked fears of a protracted military engagement.
Bitcoin has dropped over 3.7% as of last check, as traders are now worried that the geopolitical instability and continued military action could drive up energy costs and keep the pressure on inflationary data.
At press time, the flagship crypto was hovering above $66,590, as bulls are defending the psychological level of $65,000, which is currently acting as the last line of defense for the current uptrend.
In terms of the technical structure, if Bitcoin fails to hold above this mark, it would further reinforce the prevalent bearish sentiment and push prices lower towards the $60,000 handle.
Over the past months, this level has acted as a strong demand zone, where buyers have historically stepped in to prevent a deeper correction.
Bitcoin price could recover if Middle East tensions ease
Despite his pledge of intensified attacks towards Iranian infrastructure, Trump noted that discussions are ongoing over a potential ceasefire, and both sides have kept diplomatic channels open.
The US has been pushing for Iran to dismantle its nuclear programs and open its facilities to international inspectors.
Meanwhile, Iran has demanded a permanent end to the war, financial compensation for damages, and a total end to US military presence in the region.
Trump claimed that the end of hostilities will remove the blockade “naturally” and gas prices will plummet as the focus shifts to rebuilding the economy.
“When this conflict is over, the strait will open up naturally. It’ll just open up naturally. They’re going to want to be able to sell oil because that’s all they have to try and rebuild. It will resume flowing, and the gas prices will rapidly come back down. Stock prices will rapidly go back up,” he said.
As seen previously, if that happens, it is expected to benefit Bitcoin and other risk assets as liquidity returns to the market.
However, a prolonged conflict between the two powers would put the global recovery at risk, especially if key support levels fail to hold in the coming weeks.