BlockBeats reported that on October 2, QCP Capital posted on its official channel that the conflict between Israel and Iran has intensified. Earlier this week, Israel launched a ground offensive against Lebanon, and Iran launched more than 180 missiles yesterday in response. However, the risk of TradFi asset transfer is small. The S&P closed down 1%, and the WTI index closed up 2%, with little follow-up to today's price action.
Crypto, however, was hit much harder, with BTC closing down 4% and seemingly finding some support at the $60,000 level, but further escalation could push BTC down to $55,000. Middle East geopolitics will capture attention, but the shallow sell-off suggests that the appetite for risk assets remains strong. This minor setback should not distract from the bigger picture.
China’s actions and economic situation are reminiscent of Japan in the 1990s. In response to deflation in Japan, the Bank of Japan cut interest rates, introduced negative interest rates, and launched a then-novel quantitative easing program. The flood of liquidity from the People’s Bank of China and potential fiscal support could support Chinese asset prices, and bullish sentiment could spread globally, supporting risk assets including cryptocurrencies.
In a recent Q&A, Powell supported further rate cuts in 2024. Asset prices are expected to remain supported heading into 2025 as the world's largest central banks, including the Federal Reserve and the People's Bank of China, have begun a rate-cutting cycle.
