How will Bitcoin be affected by the "cryptocurrency" damage caused by the Israeli-Palestinian conflict?

On October 11, 2023, Alon Muroch, the Israeli founder of SSV Network, an Ethereum staking infrastructure, was drafted into the army. So what other important Israeli projects are worth paying attention to? On October 7, the Israeli-Palestinian conflict broke out, and safe-haven assets opened sharply higher, but the "digital gold" Bitcoin continued to fall. What are the main reasons behind this? What do the big Vs in the crypto market think?

Israel's concept currency is hotly discussed, and the "encryption" is hurt by the geopolitical war

Israel is a technological powerhouse, and its crypto projects cover many fields such as Layer 2, DeFi , Layer 1, NFT and games. After the Israeli-Palestinian conflict, it can be said that there were some direct impacts on the crypto industry, and the market also paid close attention. On October 11, 2023, Alon Muroch, the Israeli founder of SSV Network, the Ethereum staking infrastructure, posted on X : "I have been drafted into the army, and the actual situation is much worse than described in the news. The only word I can think of is "massacre", and 90% (of the people being massacred) are civilians. We are turning the situation around, but this process will neither be short nor beautiful." In addition to SSV, the most noteworthy projects include StarkWare, Bancor, etc.

Layer 2 developer StarkWare : StarkWare is headquartered in Netanya, Israel. It was co-founded in 2018 by Professor Eli Ben-Sasson of the Israel Institute of Technology. It provides zero-knowledge proof technology based on STARK to improve the scalability, security and privacy of blockchain. In September this year, StarkWare announced the StarkNet token economic model. STRK was originally scheduled to be unlocked for the first time on November 29. After the Israeli-Palestinian conflict, community members expressed concern about the safety of the project and airdrops.

DeFi project Bancor : Bancor was launched in 2017 by the Bprotocol Foundation, which was founded by a group of Israelis with Silicon Valley entrepreneurial backgrounds. It is headquartered in Zug, Switzerland, and operates a research and development center in Tel Aviv, Israel.

Privacy Project Beam : Beam is a privacy coin project developed based on the MimbleWimble protocol. Unlike Monero, Zcash , etc., MimbleWimble tokens enforce privacy at the protocol level instead of adding a layer on top of the original blockchain to achieve privacy.

Privacy public chain Secret Network (SCRT): Secret Network is a privacy-preserving smart contract public chain built on the Cosmos technology architecture. It is also the first blockchain with privacy-preserving smart contracts. It originated from a project called Enigma at MIT.

Other major crypto projects: blockchain IaaS platform Orbs , crypto payment infrastructure Fuse (FUSE), DApp application platform ChromaWay , liquidity protocol B.Protocol (BPRO), Web3 education platform Open Campus, crypto exchange INX Limited, P2E game Kryptomon, NFT platform NFTrade , crypto application store Magic Square (SQR, not launched), space-time consensus protocol public chain Spacemesh (not launched), on-chain service tool Dot Finance (PINK, not launched), DeFi platform Voltage Finance.

How the Israeli-Palestinian conflict is more like a butterfly's wings: how it will affect the crypto market

In addition to some Israeli concept tokens being directly impacted and affected, let’s take a more macro perspective on the impact of the Israeli-Palestinian conflict on the crypto market.

On October 7, affected by the Israeli-Palestinian conflict, gold opened sharply higher, rising from $1,810 to $1,855, WIT crude oil futures rose 5%, and the US dollar index rose rapidly. Overall, funds have poured into safe-haven assets in the short term. On the other hand, Bitcoin has continued to fall, and the performance of "digital gold" is disappointing. According to Coinmarketcap, Bitcoin quickly rose to $28,300 at 5 a.m. on October 7, and then continued to fall back, currently around $27,000. What is the reason behind this?

Although BTC is called "digital gold" and some people in the crypto market also regard Bitcoin as a safe-haven asset, in fact, this is only relative to some small countries with poor economies and other altcoins. If Bitcoin is compared with gold, crude oil, and the US dollar, the safe-haven consensus of Bitcoin is relatively weaker. In the eyes of Wall Street financial institutions, Bitcoin's speculative attributes are still very strong, and it is difficult to classify it as a safe-haven asset. According to the MSCI World Index, the correlation between Bitcoin and risky assets has increased significantly since August.

In fact, as Bitcoin enters the global financial market, the control of Bitcoin is gradually shifting to Wall Street, which is also the reason why Bitcoin has fallen in the first half of the year. As for the fact that Bitcoin has not fallen sharply at present, this article is mainly because it has a certain blood-sucking effect. Crypto V @William11Chan tweeted earlier that Bitcoin's market share continues to hit new highs. Under the cover of Bitcoin, people outside think that this market has not fallen much, but in fact, the copycats have been defeated. The current market share is about 5-10 points of blood loss for every point increase in copycats, which is quite brutal.

From a longer-term perspective, the most important impact of this conflict is oil production. The oil problem will affect the inflation problem in the United States, which will further affect the Federal Reserve's policy making; the Federal Reserve's monetary policy will greatly affect the future direction of Bitcoin.

At 2:00 pm EST on Wednesday, the Federal Reserve released the minutes of its last monetary policy meeting. The minutes said that it might be appropriate to raise interest rates once more in the future. The minutes of the Federal Reserve meeting mentioned that participants believed that it was critical that the stance of monetary policy remain restrictive enough to keep inflation at the 2% target over time. On Wednesday's economic data, the U.S. core PPI rose to 2.7% year-on-year in September, which also exceeded expectations of 2.3% and the previous value of 2.2%, mainly due to rising energy costs, which may provide a reason for the Fed to continue raising interest rates.

How do crypto influencers view the future development of the crypto market?

Where does the main selling pressure for BTC's decline come from? Where will favorable support be formed below? In the context of tense geopolitical situation and strong expectations of the Federal Reserve for cryptocurrencies, how will the crypto market develop in the future? This article sorts out the views of some crypto big Vs for investors' reference only.

@intotheblock tweeted: Bitcoin miners sold more than 20,000 BTC this week, the highest amount since April. This shows that miners are taking advantage of the rise in Bitcoin prices to offset operating costs. Although not uncommon, it may bring huge selling pressure to the market.

Phyrex (@Phyrex_Ni) tweeted: Judging from the current single price inventory, it is still relatively safe. The main BTC has begun to move towards $28,000. In the data from last Friday, we saw that the inventory of $1,000 between $29,000 and $30,000 dropped to 1.66 million. Now the inventory in this range is 1.642 million, which is a drop of 18,000 BTC after a weekend. The inventory of $1,500 between $25,500 and $27,000 was 1.97 million, and now it is 1.906 million, which is a drop of 64,000 BTC in a weekend. It can be seen that short-term holders' profit selling is still the main pressure on BTC at present, while the departure of loss-making chips is much less.

@Metrics Ventures: From the perspective of chips, we can observe that as the market falls, Bitcoin is hoarded in the $29,000-$30,000 chip-intensive area and begins to move to the $25,000-$26,000 line, indicating that the previously locked-in positions due to the expectation of Bitcoin ETF passing and the positive expectations of the XRP/DCG lawsuit are surrendering, cutting their losses and throwing out chips, and the existing funds on the market provide relatively supportive buying. ETH also has corresponding chip characteristics. At present, the proportion of ETH chips that have realized losses on the chain is close to 50%, which is similar to the characteristics of previous panic bottoms, and also indicates that the bloody chips at the spot level are being thrown out.

Summarize

Overall, Israel is a technological power, and the Israeli-Palestinian conflict has a direct impact on some projects in the crypto market; from a macro perspective, whether more oil-producing countries will participate in the Israeli-Palestinian conflict in the future is a very uncertain factor, which will also directly affect the macro-economy and the development of the crypto market. From the perspective of the crypto market, the main reasons for the decline of Bitcoin this time are: the increase in miners' operating costs has triggered a large number of sell-offs, and BTC profit-taking has been sold off after the good news has been exhausted. From the current chips, Bitcoin has strong support at $25,000-26,000.