Commodities such as gold and crude oil have been rising as the specter of war looms in the Middle East. However, Bitcoin is moving in the opposite direction, leading to renewed debate on whether it’s a safe-haven asset.
Gold prices gained 1.4% on the day to reach $2,665 per ounce on Oct. 1, just shy of its all-time high, according to Goldprice.org. Meanwhile, crude oil prices spiked as much as 7% to reach $72 per barrel.
Bonds and the US dollar also climbed following Iran after a major airstrike targeting sites across Israel late on Oct. 1. Israel’s air defenses shot down most of the 180 incoming missiles, according to reports.
“The escalating conflict in the Middle East has prompted investors to seek security in gold, bolstering its appeal amidst broader market uncertainty,” commented Li Xing, Financial Markets Strategist Consultant to Exness.
Bitcoin (BTC), often referred to as a safe haven asset, did the opposite, tanking more than 3% over the past 24 hours.
The asset dumped by almost $4,000, falling from an intraday high of $64,000 on Oct. 1 to bottom out at $60,315 at 20.40 UTC on Oct. 1. It has since recovered marginally to trade at $61,800 at the time of writing.
According to Coinglass, 154,770 traders were liquidated over the past 24 hours with total liquidations of around $521 million.
Israeli Prime Minister Benjamin Netanyahu has since promised retaliation for the attack.
“Iran made a big mistake tonight – and it will pay for it,” he said in a statement.
BTC’s response to Iran’s airstrike. Source: TradingView
It is not the first time this behavior has been seen. Bitcoin prices plummeted more than 8% on April 13 after Iran launched a drone attack on Israel.
Bitcoin questioned as a safe haven asset
Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, was among those who believe investors are selling BTC to buy gold, while Adam Cochran quipped about it being a so-called safe haven.
Meanwhile, precious metals analyst Jesse Colombo told his 169,000 X followers that Bitcoin and crypto always tank when there are geopolitical fears, unlike precious metals, before adding:
“That confirms my long-held belief that crypto is not a safe haven. It’s yet another risk asset just like high-flying tech stocks.”
US tech stocks also tanked on Tuesday, with Apple and Nvidia sinking around 3% and the Nasdaq 100 losing more than 2%.
However, BlackRock CEO Larry Fink said that BTC could still be an alternative inflation hedge asset while speaking to Fox Business on Oct. 1.
🔥LARRY FINK: “Instead of investing in gold as a hedge against inflation … [#Bitcoin] can represent an asset that people play as an alternative.” pic.twitter.com/6ksXWwoFof
— Cointelegraph (@Cointelegraph) October 2, 2024
Related: Bitcoin price may need 3 months to copy gold bull run — Analyst
Head of Research at 10x, Markus Thielen, told Cointelegraph that Bitcoin was initially designed as a peer-to-peer electronic cash system, not a safe haven asset, before adding:
“Bitcoin is still maturing and has yet to fully transition into its potential role as a gold substitute, which some believe will occur if governments outlaw individual gold ownership.”
He said that until then, “Bitcoin’s price will continue to be influenced by economic and liquidity cycles,” and the current economic outlook remains weak.
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