Story by: Ben Walsh
Bitcoin is spiking, highlighting its role as a haven asset, as military tensions and the prospect for increased violence roil the Middle East.
The digital currency has jumped about 10% since late Thursday and was trading at $7,530 on Monday morning. Bitcoin and other cryptocurrencies have tended to rise when geopolitical risks have come to the fore in recent years.
More traditional haven assets such as gold and U.S. Treasury debt have gained ground as well since the U.S. assassinated Iranian military commander Qassem Soleimani. Oil, meanwhile, has risen because of fear that production, or exports from the Middle East, could be affected by the conflict.
“We’ve seen Bitcoin price surges before during times of heightened geopolitical tensions,” Nigel Green, the chief executive and founder of the financial consultancy deVere Group, said in a statement. “Bitcoin is living up to its reputation as ‘digital gold.’”
After languishing around $4,000 for the first part of 2019, Bitcoin surged past $11,000 in August as China devalued the yuan in an attempt to respond to U.S. tariffs.
Bitcoin has previously spiked during periods of tension in the Middle East. Volatility increased in 2017, when the Saudi Arabian government detained numerous members of the royal family at the Riyadh Ritz-Carlton hotel, in what it said was a crackdown against corruption.
Right now, President Donald Trump’s decision to kill Soleimani has placed “uncertainty over Washington policy forecasting,” Thomas Block, Fundstrat’s Washington, D.C., policy analyst, said in a Monday email to clients. “Traditionally a president fighting a foreign foe would see the nation and Congress unite behind them, but these are unprecedented times with a crisis and impeachment facing Congress simultaneously.”
Despite the uncertainty, it is difficult to know how long Bitcoin’s crisis-induced rise will last.
“Bitcoin’s limited safe-haven gains could be running out of steam in the coming days as volumes fall to the lowest levels since April, back when prices were barely hanging onto the $4,000 level,” said Edward Moya, a senior analyst at OANDA, a currency trading and analysis firm. “If Bitcoin does not break out above the $8,000 level this week, we could see crypto sellers return aggressively.”