According to Arthur Hayes, co-founder of the crypto exchange BitMEX, Bitcoin prices are likely to rise if increasing tensions in the Middle East lead to a surge in oil and energy prices.
In an Oct. 16 blog post, Hayes predicted that “oil prices would spike” if major oil and natural gas fields were attacked amid intensified conflict between Iran and Israel. He noted that this scenario would “drag all other energy prices higher as countries low on oil would turn to alternative energy sources to power their economies.”
“What happens to the fiat value of Bitcoin? It pumps,” he remarked.
“Bitcoin is stored energy in digital form. Therefore, if energy prices increase, Bitcoin will appreciate in value against fiat currency.”
Hayes explained that while mining profitability would adapt to changes in difficulty, a decrease in hashrate would also lead to lowered mining difficulty, making it simpler for new participants to mine Bitcoin profitably at higher energy prices.
He cited a historical example of significant commodity price increases from 1973 to 1982 during the oil crises triggered by the Arab oil embargo and the Iranian revolution. During that period, oil prices rose by 412%, and gold experienced a 380% increase, closely mirroring oil’s rise.
While Bitcoin (BTC) was not present during these oil crises, it has demonstrated a correlation with commodities during periods of inflation.
Hayes concluded that should Middle Eastern oil be removed from the market, “the Bitcoin blockchain will continue to function, and its price will at least maintain its value against energy, likely rising in terms of fiat currency.”
This week, oil prices have decreased, with West Texas Intermediate falling about 3.7% since Monday to $71.09 per barrel on Oct. 17, according to Oilprice.com.
In contrast, Bitcoin saw an increase of over 8% over the week, surpassing $68,000 for the first time since late July during early trading on Oct. 18.
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Gold has continued to rise, reaching an all-time high of over $2,700 an ounce. Source: Kitco
This week, gold prices also hit an all-time high of $2,711 per ounce on Oct. 17, as reported by GoldPrice.org.
The increase in gold prices comes as investors seek safe-haven assets in light of uncertainty surrounding the upcoming US election and rising tensions in the Middle East.
Israel has announced its intention to retaliate against Iran for an attack in early October, in which Iran fired approximately 180 missiles following Israeli airstrikes targeting Iranian-backed Hezbollah militants in Lebanon.
Nitesh Shah, a commodity strategist at WisdomTree, stated to Reuters on Oct. 17, “Gold often is the place to go in times of uncertainty.”
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