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Analysts Forecast Increased Volatility in Markets Due to Israel-Palestine War

2 mins
Updated by Geraint Price
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In Brief

  • Israel's war declaration against Hamas sparks speculation on Bitcoin (BTC) and altcoin markets' reaction amid volatility.
  • Crypto analyst Miles Deutscher notes markets often recover quickly from wars despite initial volatility, impacting S&P 500.
  • As Bitcoin correlates with the S&P 500, it is expected to show short-term volatility; BTC has declined nearly 2% since the conflict.
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As Israel declares a state of war against the Palestinian military group Hamas, the crypto community is speculating on how Bitcoin (BTC) and the broader altcoin markets will react.

The market volatility tends to increase during geopolitical crises such as war or other military conflicts. While the price of commodities such as oil and gold increases, investors tend to move away from riskier assets such as stocks and crypto.

Crypto Analyst Expects Volatility in Shorter Term

The renowned crypto analyst Miles Deutscher talked about the impact on the S&P 500 due to the Israel-Palestine war. He wrote on X (Twitter):

“Data suggests that markets typically recover quickly from wars and other geopolitical shocks despite experiencing initial volatility.”

The screenshot below shows that while there was uncertainty in the first month of the conflict, the market started turning positive after three months in most cases. In 75% of the cases, the S&P 500 was positive 12 months after the military event.

The data accounted for military conflicts in the period between the Pearl Harbor incident in December 1941 and the Iraq war in March 2003.

Israel-Palestine war crypto, ,military conflicts
S&P 500 performance around military conflicts. Source: X (Twitter)

The cryptocurrency market has not witnessed major geopolitical conflicts, except the Russia-Ukraine war. Hence, it is difficult to determine the isolated impact on the crypto assets. However, there has been a correlation between Bitcoin and the S&P 500 index.

Read more: Crypto vs. Stocks: Where To Invest Your Money in 2023

As a result, along with the S&P 500, Bitcoin is also likely to show volatility in a shorter time frame.

The Bitfinex Alpha report shared with BeInCrypto suggests that there will be “heightened levels of volatility” in Bitcoin’s price action. The screenshot below shows that the daily historical volatility remains above the 200-day exponential moving average (EMA).

Bitcoin historical volatility index. Source: Bitfinex

According to TradingView data, Bitcoin (BTC) has declined nearly by 2% since the Israel-Palestine war started on Saturday.

Read more: Cryptocurrency Trading Courses Tailored for Beginners.

Bitcoin price, Israel-Palestine war crypto
BTC/USDT daily time frame. Source: TradingView

Do you have anything to say about the impact on crypto due to the Israel-Palestine war or anything else? Write to us or join the discussion on our Telegram channel. You can also catch us on TikTok, Facebook, or X (Twitter).

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

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Harsh Notariya
Harsh Notariya excels in delivering SEO-optimized crypto news under tight deadlines. Previously, as a Growth Marketer at Sporty and a Community Consultant at Totality Corp, he significantly boosted community engagement and followers. Harsh also crafted engaging content for top crypto influencer Shivam Chhuneja, blending meme references for an educational yet fun experience. His versatile skills make him a notable figure in crypto journalism.
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