As tensions rise in the Middle East, commodities like gold and crude oil are seeing notable price increases, while Bitcoin has taken a downturn. This divergence has reignited debates over Bitcoin’s role as a safe-haven asset.
According to a report by Martin Young for Cointelegraph, on Tuesday, gold surged by 1.4%, reaching $2,665 per ounce, close to its all-time high. Meanwhile, crude oil prices spiked by 7% to $72 per barrel. These gains came after airstrikes across Israel, with Israeli air defenses intercepting most of the 180 missiles launched. Bonds and the U.S. dollar also saw gains, further signaling investor anxiety.
“Investors are seeking refuge in gold amidst the uncertainty in the Middle East,” commented Li Xing, Financial Markets Strategist at Exness.
Contrary to its usual label as a “safe haven,” Bitcoin dropped more than 3% over the same 24 hours, falling from an intraday high of $64,000 to a low of $60,315 before slightly recovering to $61,800. At the time of writing, BTC is trading at around $61,693, down 3.5% in the past 24-hour period. Coinglass data reported that around 154,770 traders were liquidated, with total liquidations amounting to $521 million.
According to Reuters, Israeli Prime Minister Benjamin Netanyahu said in a statement that Iran’s missile attack on Israel was unsuccessful and promised a response. He remarked that Iran had made a significant miscalculation and would face consequences. Netanyahu emphasized that the Iranian regime underestimated Israel’s resolve to defend itself and retaliate against its adversaries.
This isn’t the first time Bitcoin has reacted negatively to geopolitical conflict. A similar drop occurred in April following a drone attack by Iran on Israel. Some analysts, like Jeroen Blokland of Blokland Smart Multi-Asset Fund, believe that investors are selling Bitcoin to buy gold. Meanwhile, Adam Cochran and Jesse Colombo have questioned Bitcoin’s reliability as a safe haven, although the former’s comments may have been partly made in jest. Precious metals, by contrast, tend to perform better during such crises. Colombo argued that Bitcoin behaves more like a risk asset similar to tech stocks, which also fell.
However, it is worth noting that BlackRock CEO Larry Fink suggested in July 2023 that Bitcoin could still serve as an alternative hedge against inflation.
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