Geopolitical De-escalation Fuels a Crypto Recovery

After reaching a cycle low of approximately $60,000 earlier this month, Bitcoin (BTC) has staged a notable recovery, climbing back above the $65,000 level as of June 18.

While market analysts had been bracing for further downside, the primary catalyst for the reversal has been a sudden improvement in the geopolitical climate surrounding the Middle East and the Strait of Hormuz.

The shift in market sentiment

About 20% of the world’s oil traffic passes through the Strait of Hormuz, and recent fears regarding the safety of this passage had spiked energy prices and induced widespread inflation concerns. The market is now beginning to price in a potential de-escalation, which has immediately lowered the "risk-off" pressure that was weighing heavily on volatile assets like Bitcoin and Ethereum.

With Bitcoin stabilizing near $65,800, the market is showing signs of a "Short Squeeze." A large number of traders had heavily bet on further declines following the early June collapse; now, those traders are being forced to cover their positions by buying back assets, creating a positive feedback loop that is fueling the current rally.

Previously, Coinidol.com reported that since June 5, the Bitcoin price has traded above the $60,000 low but below the moving average lines or the resistance at $67,000.  

In the meantime, Ethereum price has slowed its decline but remains range-bound above the $1,500 support and the $1,840 high on the 4-hour chart, as Coinidol.com wrote. The price has retraced but remains caught between the moving average lines. 

Institutional "HODLing"

Despite the recent volatility, long-term indicators remain robust. K33 Research reports that record supply metrics and near-historic inactivity among long-term holders suggest that the "weak hands" have already been purged from the ecosystem. While the industry is not out of the woods yet, with the market still monitoring U.S. interest rate policies and the hawkish tone of the Federal Reserve, the current recovery provides a tangible sign of resilience.

For the first time in weeks, the Fear & Greed Index is shifting away from its deepest extremes, suggesting that serious institutional capital is beginning to step in to buy the dip.

Disclaimer. The data provided is collected by the author and is not sponsored by any company or token developer. This is not a recommendation to buy or sell cryptocurrency and should not be viewed as an endorsement by Coinidol.com. Readers should do their research before investing in funds.