Bitcoin Falls 3.5% Amid Rising Middle East Tensions After Israeli PM Promises Iran Will ‘Pay’ for Its ‘Big Mistake’

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As a seasoned crypto investor with a decade of market fluctuations under my belt, I must admit that the recent events in the Middle East have left me scratching my head. Gold and crude oil are traditionally seen as safe havens during times of uncertainty, but Bitcoin’s response has been anything but predictable.

Amidst escalating tensions in the Middle East, I’ve observed significant price surges in commodities such as gold and crude oil. On the flip side, Bitcoin seems to be experiencing a downturn. This contrast has once again sparked discussions about Bitcoin’s function as a safe-haven asset, with some questioning its reliability during geopolitical crises.

As reported by Martin Young for Cointelegraph on Tuesday, gold experienced a 1.4% increase, reaching approximately $2,665 per ounce, just shy of its record high. Simultaneously, the price of crude oil escalated by 7%, settling at $72 per barrel. These rises were prompted by a series of airstrikes in Israel, with Israeli air defenses successfully intercepting around 180 missiles. This incident also caused bonds and the U.S. dollar to appreciate, which is often an indication of investor unease.

As a financial markets strategist at Exness, I’ve observed that investors are turning to gold as a safe haven due to the unrest in the Middle East.

Despite being often referred to as a “safe haven,” Bitcoin experienced a dip of over 3% in the last 24 hours. It peaked at $64,000 but dropped to a low of $60,315 before slightly rebounding to $61,800. At present, Bitcoin is trading around $61,693, marking a decrease of approximately 3.5% in the past day. According to Coinglass data, about 154,770 traders were liquidated, with total liquidations amounting to a significant $521 million.

As reported by Reuters, Israeli Prime Minister Benjamin Netanyahu declared in a statement that Iran’s missile attack on Israel had failed. He pledged a response and stated that Iran had erred greatly and would bear the repercussions. Netanyahu stressed that the Iranian government underestimated Israel’s determination to protect itself and retaliate against its enemies, implying that they will be held accountable for their actions.

Previously, Bitcoin has shown a tendency to decline during geopolitical conflicts, much like it did in April after an Iranian drone strike on Israel. Some financial experts, such as Jeroen Blokland of the Blokland Smart Multi-Asset Fund, propose that investors are swapping Bitcoin for gold instead. However, analysts like Adam Cochran and Jesse Colombo have expressed doubts about Bitcoin’s role as a safe haven. While Cochran’s comments may have been partially humorous, they both challenge Bitcoin’s reliability in such situations. On the other hand, traditional precious metals typically perform better during times of crisis. Colombo contends that Bitcoin reacts more like a risky investment, similar to tech stocks, which also dropped in value under stressful conditions.

The best analyses are based on one day of data

— Erik Voorhees (@ErikVoorhees) October 1, 2024

Now, juxtapose Bitcoin’s intraday chart with gold:

— Jesse Colombo (@TheBubbleBubble) October 1, 2024

Notably, Larry Fink, the CEO of BlackRock, proposed in July 2023 that Bitcoin might continue to function as a potential safeguard against inflation.

Larry Fink has expressed his hope that the SEC will view his ETF proposal as a means to democratize cryptocurrency and reduce costs. He also considers Bitcoin as a global asset, akin to gold. It appears he is fully committed to collaborating with regulators to secure approval, although he’s uncertain about the timeline for this process, as reported by Fox Business.

— Eric Balchunas (@EricBalchunas) July 5, 2023

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2024-10-02 10:04