Cryptocurrency is becoming flight-to-safety asset for investors amid geopolitical turmoil
Escalating tensions between the USA and Iran are likely to drive the price of Bitcoin higher, according to industry experts.
Following the US killing of Qassem Soleimani, the commander of Iran’s elite Quds Force, who was in charge of the country’s regional security strategy, Bitcoin jumped five percent in the first two hours before rallying further to $7,575 with a total price increase of 10.66 percent until Tuesday.
Further movement is expected following the revenge attacks by Iran on US military bases on Wednesday morning.
Nigel Green, chief executive and founder of deVere Group, said: “We’ve seen Bitcoin price surges before during times of heightened geopolitical tensions. For instance, in August it jumped as global stocks were rocked by the devaluation of China’s yuan during the trade war with the US.
“This latest Bitcoin price increase underscores a mounting consensus that Bitcoin is becoming a flight-to-safety asset.”
With an escalation in geopolitical turbulence, which typically unsettles traditional markets, experts predict that a growing number of investors will decide to increase their exposure to decentralised, non-sovereign, secure currencies, such as Bitcoin, to help protect them from the turmoil.
Dominique El Khoury – market research analyst at AxiTrader, told Arabian Business: “I expect an increase in the demand if the tension continues between the US and Iran. Also, from a technical point of view, if this month’s price closes above $7,800 I believe it could increase buyer’s appetite.
“As this could be the beginning of a new wave, it should be monitored closely, and as always risk management strategies should be put in place when trading.”
Widely considered as the most powerful player of blockchain technology, Bitcoin had a profitable 2019 where buyers pushed the market from around 3,200 all the way to 13,850.
However, Ihab Maximous – market research analyst at FXGate, said it is too early to judge whether Bitcoin or other major digital currencies will play the role of classic safe-haven assets like gold.
“As for 2020, the crypto market may develop further and gain more traction, as giant institutional investors step in seeking profits, which could eventually give a boost to Bitcoin and other cryptocurrencies,” he told Arabian Business.