Iran friction continues to drag on bitcoin as macro risks mount

FUNDAMENTAL OVERVIEW

Bitcoin, too, has been exposed to the worsening macro environment in the past few days, as bets on additional Federal Reserve rate increases and deteriorating geopolitical conditions have mounted.

Risk appetite took a hit after Trump dampened expectations of an early end to the Iran war by repeating that the US would reach an agreement with Tehran after the November elections.

As the weekend approached, though, hopes for a US-Iran deal were revived after Iran submitted a proposal to reopen the Strait of Hormuz within seven days under certain conditions.

On Saturday, however, Trump turned down the offer and told reporters he expected to resume bombing Iran after the midterms. The rejection weighed on the crypto market, dragging bitcoin lower again.

With no bitcoin-specific catalysts on the horizon, attention will stay on the Middle East and the Fed. Were a breakthrough to occur, bitcoin would benefit, as aggressive rate-hike expectations would likely be pared back. A prolonged stalemate or another re-escalation, on the other hand, would probably continue to weigh on the cryptocurrency.

BITCOIN TECHNICAL ANALYSIS – DAILY TIMEFRAME

Bitcoin is consolidating around the 82,500 level, a broken zone that has turned from resistance into support. For risk management, buyers will get a better risk-to-reward setup near the ascending trendline as they push for new highs, while sellers are looking for a downside break that could extend the drop toward 76,000 support next.

BITCOIN TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

Bitcoin is trading between support at 82,500 and resistance at 85,000. Buyers are expected to keep stepping in near support, with a defined risk below it, while aiming for a rally toward 90,000. Sellers, meanwhile, will look for a break lower that extends the pullback into the major trendline.

BITCOIN TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

There is little to add here, as traders are likely to keep playing the range by buying at support and selling at resistance until a breakout on either side occurs.

UPCOMING CATALYSTS

Due tomorrow are the US Consumer Confidence report and the US Job Openings data. Wednesday brings the US ADP and the US PCE price index. Thursday has the US ISM Manufacturing PMI and the latest US Jobless Claims figures. The week concludes on Friday with the US NFP report.