Bitcoin (BTC) Falls Below $63K as Investors Sell Into Gold Amid Rising Geopolitical Tensions

On Tuesday, Bitcoin (BTC) fell below the critical $63,000 threshold, reflecting a broader decline in the cryptocurrency market, which has shed nearly

Bitcoin (BTC) price dropped below the critical $63,000 level on Tuesday, reflecting a broader downturn in the cryptocurrency market, which lost nearly $200 billion in total market cap over the weekend.

This decline comes after Bitcoin scaled a two-month peak of $66,500 on Friday, sparking bullish sentiment among investors as the last quarter of the year begins. However, a string of geopolitical developments, including rising tensions in the Middle East, are putting the resilience of risk assets like Bitcoin to the test.

Bitcoin Struggles as Investors Sell into Gold

According to market expert Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, global investors are increasingly selling Bitcoin to buy gold, a trend that can be observed in the below BTG chart and is said to be a major factor in Bitcoin’s recent price correction.

Blokland links the cryptocurrency’s struggles to the escalating tensions between Iran and Israel, which have worsened over the past month. The situation is raising concerns about investor confidence, given that gold serves as a safe-haven asset that can offset volatility in the digital currency market.

The situation escalated further on Tuesday as missiles were reportedly launched from Iran towards Israel, triggering urgent warnings from the White House. Officials said that Iran was preparing for a potential ballistic missile attack on Israel, heightening fears of a wider conflict in the region.

The White House said it was extending full support to Israel in preparing its defenses and warned of severe consequences for Iran if a military strike were to occur.

Bitcoin has been historically dubbed “digital gold,” but amid ongoing economic uncertainty and geopolitical turmoil, fears of a global recession are mounting. This volatility could be driving investors towards safer havens, putting downward pressure on Bitcoin.

Analysts Highlight Overbought Conditions

Meanwhile, analysts are also pointing to Bitcoin’s overbought conditions, following a nearly 5% surge in the week leading up to September 27. This rally coincided with a significant net inflows into global crypto exchange-traded products (ETPs), reaching their highest levels since mid-July.

Last week, the 16 major US Bitcoin exchange-traded funds (ETFs) saw a combined net buying volume of 16,774 BTC, outpacing the typical one-month supply of newly mined Bitcoin, which stands at around 13,500 BTC.

However, this bullish sentiment was met with a reality check on Monday when Federal Reserve (Fed) Chair Jerome Powell's remarks sparked a shift in investor optimism during mid-afternoon trading.

According to CNBC, Powell stated that the central bank is not following a "pre-set path" and further interest rate cuts are up for grabs, a statement that led to a cautious mood among investors and may have contributed to the recent pullback in the market's largest cryptocurrency.

At the time of writing, BTC trades at $62,130, down over 2% in the last 24 hours.

Featured image from DALL-E, chart from TradingView.com

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