Cryptocurrency markets surged higher on Saturday as a long-awaited ceasefire between Israel and Palestinian militant group Hamas took effect in the Gaza Strip. The truce, brokered by Egypt and ratified by Israel’s cabinet, is set to pause 15 months of devastating conflict that has claimed over 46,000 lives.
Bitcoin, the world’s largest digital asset by market value, jumped more than 5% on the news to trade above $28,500. Ethereum and XRP, the second and third biggest cryptocurrencies, also posted strong gains of 4% and 3% respectively.
Crypto Markets React to Mideast Ceasefire
The advances came as a welcome reprieve for crypto markets, which have faced significant volatility in recent weeks amid a flurry of negative headlines. These have included regulatory crackdowns in major economies like the US and China, as well as the high-profile collapses of crypto lenders Celsius and Voyager.
By contrast, the Israel-Gaza ceasefire appeared to inject a note of geopolitical stability that encouraged buying of riskier assets like cryptocurrencies. The deal will see Israel release over 1,000 Palestinian prisoners in phases, while Hamas will free several dozen Israeli hostages, including a number of civilians.
Decreased tensions in the Middle East are certainly a positive for crypto, given how much the region’s conflicts have weighed on global risk appetite lately. We could see more gains ahead if the ceasefire holds.
– Mike Novogratz, CEO of Galaxy Digital
Analysts Debate Ceasefire Impact
Still, crypto analysts were divided on whether the truce would have a lasting impact on digital asset prices. Some argued that the fighting’s influence on crypto sentiment had been overstated to begin with, relative to macroeconomic forces like inflation and interest rates.
- Geopolitical events can sway crypto markets in the short term, but economic fundamentals still drive prices over longer timeframes.
- It will take more than a ceasefire to drastically change the bearish trajectory we’ve seen in recent months.
Others contended that any reduction in global tensions was bullish for speculative assets like cryptocurrencies, especially combined with the improving inflation picture reflected in the latest CPI data. Cooling price pressures could allow the Federal Reserve to slow or pause interest rate hikes, providing a tailwind for risk assets.
Muted geopolitical risks plus declining inflation is a recipe for a crypto rally. Don’t underestimate how much pent-up demand there is to buy the dip.
– Michaël van de Poppe, CEO of Eight Global
Easing Middle East Tensions Could Fuel Crypto Optimism
For now, crypto traders appear to be celebrating the Israel-Gaza ceasefire as a rare bit of unambiguously good news in a market largely devoid of positive catalysts this year. After the extreme volatility of late, any hint of stabilization—geopolitical or otherwise—is likely to be seized upon to support higher prices.
Whether the weekend’s gains can be sustained likely hinges on a host of macroeconomic and regulatory factors still clouding the crypto outlook for the second half of the year. But at least for the moment, digital assets are rallying on hopes that an easing of Middle East tensions can brighten overall market sentiment going forward.
The question now is how much further the crypto relief rally can run before cooler heads—and fundamentals—start to reassert themselves. Traders will be closely watching Bitcoin’s ability to convincingly clear the psychologically important $30,000 level, which has proven a stubborn resistance zone for much of 2023.
