Cryptocurrency trading firm QCP Capital says the “shallow sell-off” in cryptocurrency markets following Iran’s recent attack on Israel indicates well market demand for risk assets.

The cryptocurrency market continues to bid well for risky assets

Even though Iran fired more than 180 missiles at Israel yesterday, the sell-off in conventional financial assets (TradFi) was relatively compact. The S&P 500 index closed 1% lower, while US West Texas Intermediate (WTI) crude oil prices rose 2%.

In turn, the digital asset market was hit relatively harder, with the price of Bitcoin (BTC) falling by over 5% following the Iran attack. Total cryptocurrency market capitalization fell more than 6% and liquidations exceeded $550 million in the last 24 hours, data from CoinGlass indicates.

In reportQCP Capital says the top cryptocurrency appears to have found forceful support at the 60,000 level. dollars. However, the company warns that further escalation in the Middle East may cause BTC to drop to 55,000. dollars.

Referring to yesterday’s market sell-off, the trading firm said:

Middle East geopolitics will remain in the spotlight for now, but the shallow sell-off suggests the market still has a good deal for risky assets. This minor setback should not distract from the bigger picture.

The report also noted that China’s recent economic policy actions are similar to Japan’s actions in the 1990s. Notably, the Bank of Japan (BoJ) has dealt with deflation by lowering interest rates, introducing negative interest rates and embarking on a quantitative easing program. The report added:

An influx of liquidity from the PBoC and potential fiscal support will likely support asset prices in China, with bullish sentiment potentially spreading across the globe, supporting risk assets including cryptocurrencies.

Additionally, the report highlighted U.S. Federal Reserve (Fed) Chairman Jerome Powell’s recent dovish remarks by the National Association for Business Economics, signaling further interest rate cuts in 2024.

For context, the Fed cutting interest rates for the first time in 4 years on September 18. Subsequently, financial markets around the world experienced a acute augment in the prices of risk assets such as stocks and cryptocurrencies.

The report said that “asset prices are expected to remain elevated through 2025,” supported by aggressive interest rate cuts by both the largest (Fed) and third-largest (People’s Bank of China) banks central in the world.

What can we expect from Bitcoin in the fourth quarter of 2024?

Although the Iran-Israel conflict has directly impacted the BTC price, cryptocurrency analysts remain hopeful about a potentially forceful Q4 2024. One analyst suggested that the recent decline could represent a “quarterly BTC low.”

Another cryptocurrency analyst Eric Crown expressed his opinion that BTC could reach a novel all-time high (ATH) in the fourth quarter of 2024, basing his analysis on the cryptocurrency’s historical performance in the months following September. At press time, Bitcoin was trading at $61,992, down 1.2% over the past 24 hours.