Market Crash Amidst Geopolitical Tensions

Over the weekend, the digital asset market experienced a significant crash, following the news of a war breaking out between Israel and Iran.This geopolitical uncertainty and fear of a potential large-scale war led to a shift in investor sentiment, with people moving away from risk-on assets and towards safer havens like gold and the US dollar which both experienced an increase.

Bitcoin fell as much as 17%, dropping from $72.7k to $60.5k, while altcoins experienced an even larger sell-off, with Solana plummeting by 37% to $116. Since then the market has began its recovery, with those who bought the bottom of the dips, like the one on Solana, up 30% already.

Bitcoin Price

Fear & Greed Index

As you can see, Bitcoin is still in a greed market sentiment, meaning the interest around Bitcoin is still extremely strong. This is significant as it signifies that many people are not worrying about the recent downturn and continue to see the opportunities despite large market liquidations. Its also important to note that no countries, or major financial institutions have claimed to be selling their bitcoin, which strengthens our confident in this asset class.

Ondo Price

Moreover, some Real World Assets (RWA) in the crypto sector, such as Ondo Finance, have already fully recovered from the dip and is currently trading higher than it was before the war outbreak between Israel and Iran. This also showcases the strength of the RWA sector even in times of heightened uncertainty.

Market Overreaction and Potential Opportunities

We believe this dip is a market overreaction and our current thesis and conviction in the crypto markets remain the same.In fact, we believe that in times of increased uncertainty, assets like Bitcoin could perform stronger due to their decentralised nature, instant and cheap global transfers, and potential to act as a safe haven for countries, institutions and individuals.

Pulling up the Bitcoin chart at the time of the Russia-Ukraine war outbreak, we saw a similar price movement. We initially saw Bitcoin drop by more than 10%, similar to the dip we saw over the weekend, however this recovered within days. This is likely to be the case again, as there has been no major reaction by Israel, and reports by Wall Street Journal claim “roughly 50% of the ballistic missiles fired by Iran failed to launch or crashed before reaching their target’ – signifying the damage and severity may be much less than expected.

We continue to closely monitor the markets and news, and we will be quick to announce any changes in our market thesis. However, for now, we believe this presents an amazing buying opportunity to gain early exposure to the crypto markets.