The recent missile and drone attack on Israel by Iran had a significant impact on the crypto exchange, leading to a downturn in the market, particularly for Bitcoin. This event sparked a debate surrounding the challenges of investing in digital currencies, particularly the issue of liquidity for US investors who are unable to trade Bitcoin during this time.
Peter Schiff, an American stockbroker, drew attention to the low trading volume of Bitcoin ETFs and the concerns this raises in light of geopolitical tensions. He highlighted the frustration felt by investors who are unable to react to market news and movements outside of US trading hours, leaving them exposed to high risks and market deterioration.
Following the news of the geopolitical tension, the price of Bitcoin initially dropped by more than 5%, but it quickly showed signs of recovery and regained its strength. By the weekend, its cost had risen above $64,000. Currently, Bitcoin is trading at $66,447, showing a slight increase of 3.29% in the last day. Over a seven-day period, the cryptocurrency has experienced a positive growth of 0.7%, but it has declined by over 4% in the last month.
Schiff’s statement highlights the vulnerability of Bitcoin investments, particularly through ETFs, to market volatility and the time constraints that come with it. The inability to liquidate assets outside of US trading hours exposes investors to overnight crashes without the ability to take protective measures. This dilemma is particularly concerning for US investors who are unable to use traditional methods to protect their wealth during market downtime, leading to panic sell-offs.
Investors must be able to take timely action in the cryptocurrency market, which is known for its volatile nature. Just like the prices of oil, cryptocurrencies are susceptible to sudden changes in geopolitical events and other external factors. It is crucial for investors to have effective risk management techniques in place to protect their investments.
The recent wave of crypto market selloffs triggered by geopolitical tensions has posed additional challenges for ETF investors compared to those who directly hold Bitcoin in their wallets. Furthermore, the lack of liquidity in global markets during US trading hours results in morning shocks and negatively impacts investors’ portfolios.
Given the increasing fluctuations in Bitcoin and other cryptocurrencies, investors need to be constantly prepared and alert in order to adapt to sudden market movements in a timely manner.
