The recent escalating conflict between Israel and Iran has caught the attention of traders and investors to question once more whether Bitcoin is a safe haven.
Iran recently launched a barrage of missiles at Israel, affecting the price of bitcoin, which fell about $4,000 after. However, Gold and crude oil prices increased as the threat of war in the Middle East grew. Bitcoin on the other hand is trending in the opposite way. According to Goldprice.org, gold prices increased 1.4% on the day to $2,665 an ounce on October 1, slightly below the record high. In the meantime, the price of a barrel of crude oil increased by as much as 7% to $72.
Similarly, In the aftermath of Iran’s massive missile strike on Israeli targets late on October 1, bonds and the US currency also increased.
Why Bitcoin fell by $4000 after the attack?
According to a financial market strategist, Li Xing, the conflict between Iran and Israel, prompted many investors to bet their money on Gold instead of bitcoin, thereby increasing the price of gold in the broader market.
Among those who claimed that investors are selling Bitcoin in order to purchase gold was Jeroen Blokland, the creator of the Blokland Smart Multi-Asset Fund. Adam Cochran joked that Bitcoin is a “safe haven.”
The asset saw a decline of about $4,000, from an intraday peak of $64,000 on October 1 to a low of $60,315 at 20.40 UTC on the same day. In the last 24 hours, and at the time of writing, bitcoin price stands at $61,700.
Coinglass reports that in the last 24 hours, 154,770 traders were liquidated, totaling around $521 million.
Since then, Israeli Prime Minister Benjamin Netanyahu has pledged to exact revenge for the assault.
Historical trends
Historically, bitcoin seems to react to conflicts between countries. In 2022, cryptocurrencies fell after Russia invaded Ukraine. At the time, bitcoin fell by 7.9% to $34,324, while other small token were losing close to 10.8%.
Similarly, an essential case study of Bitcoin’s response to geopolitical events is the trade war that raged between the United States and China between 2018 and 2020. There were times when the price of Bitcoin fluctuated more as trade tensions intensified.
In the midst of market turbulence, institutional investors and hedge funds became more interested in Bitcoin during this period. The notion of Bitcoin as a geopolitical risk hedge was nourished by this interest.
Additionally, in 2017, during the North Korea missile test, Gold and Bitcoin experienced a surge in price. Gold at the time was trading at $1,326 per ounce, while BTC set a price above $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
Indication shows that bitcoin price often react to economic and geopolitical events such as war. Many investors are always on the lookout for its implication and most especially how this will work in their favor or against. Investors betting on Gold instead of bitcoin shows that there is decreasing trust in the bitcoin. Will bitcoin ever get to $100,000?
While the U.S. election is also around the corner, it is difficult to ascertain how the Bitcoin price will turn out. However, if Israel retaliates, we might experience further depreciation in the Bitcoin price.
Also Read: How does Iran Avoid U.S. Sanctions and Sell Oil Using Cryptocurrencies?
