Will Bitcoin's price surge on the back of world tensions?

By Jonathan Jackson. Published at Jan 7, 2020, in Features

Tension between the US and Iran is likely to drive the price of Bitcoin higher. That is the opinion of Nigel Green, the chief executive and founder of deVere Group, one of the world’s largest independent financial services and advisory organisations.

Following the killing of Qassem Soleimani, the commander of Iran’s elite Quds Force, who was in charge of the country’s regional security strategy, it remains uncertain how, when, or if Iran will respond.

However, according to Green, the one thing we can take to the bank is the rise in price of Bitcoin.

Bitcoin has risen in value by around $600 since the assassination on 3 January, taking its price above $7,500.

“Bitcoin, the world’s largest cryptocurrency by market capitalisation, jumped 5% as news of the strikes broke around the world on Friday. Simultaneously, the price of gold – known as the ultimate safe-haven asset - also moved higher.

“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.

“Bitcoin is living up to its reputation as ‘digital gold’. Bitcoin - which shares gold’s characteristics of being a store of value and scarcity and of being perceived as being resistant to inflation – could potentially dethrone gold in the future as the world becomes increasingly digitalised.”

Green believes that heightened geopolitical tension, which typically unsettles traditional markets, will see a growing number of investors decide to increase their exposure to decentralised, non-sovereign, secure currencies, such as Bitcoin.

The idea is protect themselves from the current turmoil.

Of course Bitcoin is volatile and affected by many variables. However, geopolitical tensions do have a positive price impact as was evidenced with the US/China trade war.

“The serious concerns created by geopolitical issues, such as the US-Iran issue will likely prompt an increasing number of institutional and retail investors to diversify their portfolios and hedge against those risks by investing in crypto assets," Green says.

“This will push the price of Bitcoin higher. In turn, due to the market influence of Bitcoin, other major digital currencies will receive a price boost.

“Bitcoin was one of the best-performing assets of 2019 and we can expect to see its investment appeal further strengthen as it becomes known as a safe-haven asset during periods of heightened geopolitical tensions.”

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