On January 8, 2020, BTC price briefly surged to the $8,400 mark following the escalation of the US-Iran conflict, CoinStats data shows.
The hike came almost immediately after Iran fired more than a dozen ballistic missiles at Iraqi military bases and the US house troops. All that is speculated to be an act of “revenge” for the assassination of Iran’s military leader Qasem Soleimani that had been ordered by US President Donald Trump on January 3. 2020.
It now seems that BTC spiked as demand for safe-haven assets grows due to the escalating tensions between the US and Iran.
This time around, Bitcoin rose in tandem with gold, which has just reached its highest level in almost four months and could potentially touch $1,600, its five-year peak, as soon as this February.
A crypto and blockchain contributor at Forbes noted the timing of BTC’s price rally with the airstrike. Matthew Graham, chief executive of Sino Global Capital, asked:
“Do we think bitcoin is moving in reaction to geopolitical risk? Fascinating.”
Crypto analyst Peter Schiff of Euro Pacific Capital also drew the same conclusion. He tweeted that heightened geopolitical risk had resulted in both gold and Bitcoin moving higher, but for different reasons. Gold is being bought by investors as a safe-haven, while BTC is being bought by speculators betting that investors will -buy it as a safe haven.
Is BTC Becoming a Safe-Haven Asset?
The latest Bitcoin move plays right into the hands of those who believe that the digital coin can act as a safe haven asset amidst global unrest.
This became one of the most predominant narratives within the crypto space when the US-China trade war reached a tipping point back in May of last year. The BTC price surged by a massive 40% in only ten days after President Trump imposed a 25% tariff on $200 billion worth of Chinese goods on May 5.
However, there are those opposed to this narrative. Economist Alex Krüger believes that the fact that the Iran escalation could push BTC higher is “absolute nonsense.” He, however, believes that price speculators might indeed lead to another bullish move.
Price of Bitcoin Usually Affected by Geopolitical Risk
The recent BTC rally proves that geopolitical risks are more heavily weighted in the price of the digital coin.
Josh Rager, a co-founder at Blockroots, tweeted that BTC was looking strong after the US base attack news and could continue to rip up through prior targets to short.
At present, the direction of bitcoin going forward may continue to relate to how the crisis in the Middle East plays out.