- Geopolitical tensions drive up oil prices.
- Bitcoin suffers decline amid global uncertainty.
- Chinese stimulus boosts commodities.
After a remarkable recovery in the first nine months of the year, culminating in a surprising performance by the S&P 500, the index faced one of its worst days in three weeks this past Tuesday.
At the same time, Bitcoin has seen a significant drop, plummeting from around US$65 to around US$60.200, representing a decrease of almost 5% in a single day. The cryptocurrency is currently trading at around US$60.800, down 4,5% and showing signs of further depreciation.
As for the oil market, both WTI and Brent crudes have seen significant gains, driven by the recent missile attacks.
Why is bitcoin falling today?
Bitcoin and the stock market have been on a tear since Tuesday, when Iran launched a significant attack by launching approximately 200 ballistic missiles toward Israel. The attack represented the first direct response to recent tensions with Hezbollah, a group supported by the Iranian government.
The attack was described by Iran as retaliation for the killings of Hezbollah leaders in Lebanon, with warnings that any Israeli response would lead to severe consequences. In response, Israeli Prime Minister Benjamin Netanyahu called the attack a grave mistake and promised precise and surprising retaliation.
The impact of the missiles was felt most in Tel Aviv, causing explosions but only minor injuries to two people and no significant damage to structures. During the attack, people sought refuge in shelters for more than an hour, and the airspace was temporarily closed. In addition, a shooting attack prior to the bombing left eight people dead in the outskirts of Tel Aviv. In response to the incident, US President Joe Biden ordered military support for the defense of Israel.
Meanwhile, the geopolitical landscape is heating up with an Iranian missile attack on Israel, heightening global concerns. The event has sent crude oil prices soaring and reignited fears about potential energy supply disruptions. Additionally, the International Longshoremen's Association's first strike since 1977 threatens global supply chains, potentially impacting ports from Houston to Boston.
However, another element that has attracted attention to the commodities market is the robust stimulus package launched by China, the largest since the beginning of the pandemic. With promises of more support on the horizon, these measures have already started to reflect positively on the markets. Last week, a series of monetary and fiscal easing policies in China boosted the CSI 300 index by 27% from its lows in September, signaling a new bull market.
These Chinese incentives, especially the new support for its troubled housing market, add up to more than $500 billion in stimulus, according to some estimates. Such measures have had a significant impact on global commodity markets, with iron ore futures in China up more than 20%.