As an analyst with over two decades of experience in the financial markets, I have witnessed various market dynamics and trends that have shaped investment behaviors and patterns. The recent conflict between Israel and Iran has once again brought Bitcoin into focus as a potential safe haven asset. However, the latest price action of Bitcoin seems to suggest otherwise.
The intensifying dispute between Israel and Iran, as of late, has sparked renewed interest among traders and investors about whether Bitcoin can serve as a secure investment option.
In the past few days, Iran carried out a series of missile attacks against Israel, causing global markets to react. The value of bitcoin dropped significantly by approximately $4,000, while gold and crude oil prices experienced an uptick. Interestingly, while gold and crude oil are rising due to the escalating tension in the Middle East, bitcoin seems to be moving in the opposite direction. On October 1, the price of gold per ounce climbed by 1.4%, reaching $2,665, just below its record high. Meanwhile, the cost of a barrel of crude oil surged up to 7% to around $72.
After Iran’s significant missile attack on Israeli locations on October 1st, there was a corresponding rise in bond prices and the value of the US dollar.
Why Bitcoin fell by $4000 after the attack?
Based on the analysis of a financial expert named Li Xing, the geopolitical tension between Iran and Israel led investors to prefer investing in Gold over Bitcoin, thus causing an upward trend in the general market value of Gold.
Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, suggested that some people believe investors are shifting from Bitcoin to gold due to market movements. Adam Cochran made a humorous comment, likening Bitcoin to a “safe haven.
On October 1, the asset reached a high of approximately $64,000 during the trading day, but then it dropped by around $4,000 to reach a low of $60,315 at 20:40 UTC on the same day. At the moment I’m writing this, the price of bitcoin is hovering at about $61,700.
154,770 traders have had their positions closed in the past 24 hours, resulting in approximately $521 million being wiped out of the market.
Since then, Israeli Prime Minister Benjamin Netanyahu has pledged to exact revenge for the assault.
Historical trends
Historically, it appears that Bitcoin tends to respond to geopolitical conflicts between nations. For instance, in 2022, when Russia invaded Ukraine, cryptocurrencies experienced a drop. During this period, Bitcoin decreased by approximately 7.9% to $34,324, while smaller tokens saw losses of around 10.8%.
A crucial example of how Bitcoin reacted to global political developments is the trade conflict between the U.S. and China, which took place from 2018 to 2020. During periods of heightened trade tension, Bitcoin’s price exhibited greater volatility.
During times of market instability, institutional investors and hedge funds found themselves drawn to Bitcoin. This growing fascination with Bitcoin contributed to the idea of it serving as a protective measure against geopolitical risks.
In the year 2017, when North Korea conducted a missile test, both gold and bitcoin saw an increase in value. At that moment, gold was being traded at approximately $1,326 per ounce, while bitcoin’s price surpassed $4,600.
| Events | Bitcoin Initial Reaction | Trends |
| Ukraine-Russia Conflict | Bitcoin price Dropped | Rebound |
| US-Iran Conflict (2020) | Bitcoin price spiked | Stabilisation |
| North Korea Missile Test (2017) | Bitcoin price surged | Continued Price rise |
| Chine-US Trade war (2018-2019) | Caused volatility | Mixed (gains and losses) |
Conclusion
Evidence suggests that Bitcoin’s price tends to fluctuate based on economic and geopolitical occurrences, such as wars. Many investors closely monitor these events to understand their potential impact, whether it benefits or harms them. The shift towards investing in gold instead of Bitcoin implies a decrease in trust in the cryptocurrency. Will Bitcoin ever reach $100,000? That’s a question on many minds.
As the upcoming U.S. election nears, predicting Bitcoin’s future value remains challenging. If, on the other hand, Israel responds with military action, there may be additional drops in Bitcoin’s value.
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2024-10-02 15:01