Bitcoin rebounded sharply from a multi-day low of $62,400 to trade back above $64,000, recovering most of its daily losses despite two significant reports unfavorable for risk-on assets. The recovery came as geopolitical tensions escalated in the Middle East, with a leaked attack plan and reports that the Trump Administration has conveyed to Israel it will send ‘dozens more’ refueling planes ahead of a potential ‘massive offense’ against Iran. Simultaneously, US margin debt hit a new record of $1.5 trillion, with analysts from the Kobeissi Letter stating that “US investors have never been more leveraged.” The broader measure of these positions is now approximately 1.4% of the S&P’s total market cap, close to the 2018 peak.
Bitcoin recovered most of the losses seen during the day after dipping to $62,400 and is now back above $64,000. What is intriguing about this rebound is that it came after some unfavorable reports for risk-on assets.
The first report focused on more threatening developments on the US/Israel-Iran war front. Tension in the Middle East skyrocketed a couple of weeks ago when the US and Iran broke the ceasefire with new attacks.
A new report from Axios outlined the next possible steps, noting that the Trump Administration has reportedly conveyed to Israel that it will send ‘dozens more’ refueling planes ahead of a potential ‘massive offense’ against Iran. The report added that the president is expected to order the escalation ‘in the coming days.’
As expected, oil prices reacted with an immediate increase, as USOIL is up by over 20% since the war restarted. Separately, the Kobeissi Letter noted that US margin debt has risen by over $86 billion in June to a new record of $1.5 trillion, marking the third monthly increase in a row.
The margin debt has skyrocketed by nearly $500 billion in the past year. The analysts concluded that “US investors have never been more leveraged,” as the broader measure of such positions is up to approximately 1.4% of the S&P’s total market cap, close to the 2018 peak and far exceeding the 2000 Dot-Com bubble of 1.1%.
The primary cryptocurrency tends to slip following such reports, but the past few hours showed a different reaction. The asset fell to a multi-day low of $62,400 before the bulls took charge and helped it recover nearly $2,000.
Nevertheless, bitcoin remains below the recent local peak of $65,600 reached after the US CPI numbers for June came out on Tuesday. The market is still in a fragile place.
