Iran and Israel Engage in Conflict
Friday’s cryptocurrency market selloff was largely sparked by growing concerns over potential conflict between Iran and Israel, according to QCP Capital. In times of geopolitical instability, investors typically move away from riskier assets like cryptocurrencies and seek safer investments. This shift often leads to sell-offs across various risk asset classes, as witnessed in the recent downturn. In the past 24 hours, 261,054 traders were impacted, resulting in the liquidation of $860.82 million in assets as the overall cryptocurrency market cap dropped almost 5%. QCP Capital also noted the significant role played by the ETH risk reversal indicator in the liquidation. The firm observed a bearish skew in the Ethereum risk reversal, suggesting that traders were betting on a drop in ETH’s price, likely due to its use as a hedge. This technical indicator proved accurate, as ETH’s value declined by over 5% to $3100. Market fear was evident, as reflected in the negative swing of perpetual swap funding rates, which reached over -40%, marking the lowest negative funding this year and indicating a strong bearish sentiment. Furthermore, this anxiety affected the forward curve, with the front end falling below 10%, indicating a gloomy short-term outlook for cryptocurrency prices.
