Bitcoin Drops While Gold Sees Gains Amid Middle East Conflict

The value of Bitcoin experienced a significant decrease of approximately $4,000 following Iran’s launch of around 200 ballistic missiles aimed at Israel, heightening tensions in the region.

In contrast to Bitcoin, commodities like gold and crude oil have seen a rise in their prices as concerns about potential conflict increase. This has raised questions about Bitcoin’s status as a safe-haven asset.

Market Responses

On October 1, gold prices surged by 1.4%, reaching $2,665 per ounce, nearing its historical peak, according to Goldprice.org. Crude oil prices also saw an increase of up to 7%, reaching $72 per barrel.

Following the airstrikes by Iran, both bonds and the US dollar experienced a rise. Reports indicated that Israeli air defenses successfully intercepted most of the 180 missiles launched.

Li Xing, a Financial Markets Strategist Consultant for Exness, commented on the situation:

• The ongoing conflict has driven investors towards the security of gold, enhancing its attractiveness in an uncertain market.

In stark contrast, Bitcoin (BTC) saw a downturn of over 3% within a 24-hour period. Its value plummeted nearly $4,000 from a peak of $64,000 to a low of $60,315 by 20:40 UTC on the same day, before recovering slightly to around $61,800.

Data from Coinglass indicated that approximately 154,770 traders faced liquidations totaling around $521 million in the last day.

Israeli Prime Minister Benjamin Netanyahu vowed that Iran would face consequences for its actions.

He stated, “Iran made a big mistake tonight – and it will pay for it,” in a statement.

This behavior is not unprecedented; Bitcoin’s values fell over 8% on April 13 after Iran executed a drone attack aimed at Israel.

Is Bitcoin a True Safe Haven?

Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, remarked that investors might be selling BTC to invest in gold. Adam Cochran noted questions surrounding Bitcoin’s reputation as a safe haven.

Precious metals analyst Jesse Colombo expressed to his followers on X that:

“Bitcoin and cryptocurrencies consistently decline during periods of geopolitical uncertainty, unlike precious metals.”

He further asserted, “This reinforces my belief that cryptocurrencies are not true safe havens. They represent another category of risk asset alongside high-flying tech stocks.”

On the same date, US tech stocks experienced declines, with major players like Apple and Nvidia dropping around 3%, causing the Nasdaq 100 to lose over 2%.

Conversely, BlackRock CEO Larry Fink indicated that Bitcoin could serve as a viable alternative in the face of inflation during a discussion with Fox Business on October 1.

Markus Thielen, Head of Research at 10x, noted that Bitcoin was originally intended as a peer-to-peer electronic cash system rather than a safe-haven asset. He added:

“Bitcoin is still progressing through its development stages and has yet to fully evolve into a substitute for gold. This transition is anticipated if regulations restrict individual ownership of gold.”

Thielen concluded that until such developments occur, “Bitcoin’s market price will continue to be shaped by economic and liquidity trends, and the current economic outlook is not promising.”