Bitcoin Drops 3% to $98,300 Amid Middle East Tensions

Bitcoin (BTC) experienced a significant drop in price over the weekend, falling to $98,300. This decline was driven by heightened selling pressure as traders and investors were compelled to liquidate their assets amidst escalating geopolitical tensions in the Middle East. The U.S. joined Israeli strikes on Iranian nuclear installations, leading to a surge in uncertainty and fear among investors. Bitcoin, being the only liquid and tradeable asset available during the weekend, became the primary target for selling.

On Sunday, the Iranian parliament voted to close the Strait of Hormuz, a critical chokepoint for global trade. This announcement further exacerbated the selling pressure on Bitcoin, causing its price to drop even lower. However, the final decision to close the Strait rests with Iran’s Supreme National Security Council, which must consider the potential consequences, including an 80% spike in oil prices and the risk of alienating oil-rich neighbors.

Following the weekend's heavy selling, Bitcoin's price began to rally on Monday morning, rising by 3% and $3,000 from Sunday's low of $98,300 to around $101,400. This recovery is a positive sign, but it remains to be seen whether the rally can sustain momentum or if further geopolitical developments in the Middle East will hinder its progress.

The short-term outlook for Bitcoin shows signs of recovery, with the price moving above the downtrend and consolidating. The $101,000 resistance level has been flipped into support, indicating a potential for further gains. The continuation of this recovery will likely depend on the performance of the U.S. stock market, which has shown a slight increase of around 0.3% so far on Monday.

On the daily time frame, Bitcoin faces strong overhead resistance levels at $104,000 and $106,000. If the U.S. stock market continues to stabilize despite the weekend's geopolitical developments, Bitcoin's price could reach the first resistance level at $104,000. The Stochastic RSI indicator has recently shown a cross-up, which has historically preceded significant price movements. This technical signal suggests that Bitcoin could be poised for a substantial move in the near future.

On the weekly time frame, the $104,000 support level did not hold, and the price crashed through to find support at $101,000. For the bulls to regain control, they must retake the $104,000 level and reestablish it as support. The current support at $101,000 must hold firm to prevent further declines. The bears have managed to break the support and cause the Stochastic RSI indicator lines to dip below the 80.00 level, which could signal a prolonged descent if the lines do not turn back up. This new week will be crucial in determining the direction of Bitcoin's price.