Originally published on: October 18, 2024
As tensions in the Middle East escalate, Arthur Hayes, the co-founder of BitMEX crypto exchange, believes that Bitcoin prices are poised to surge alongside rising oil and energy costs.
In a recent blog post, Hayes outlined a scenario in which major oil and natural gas fields come under attack in a heightened conflict between Iran and Israel. According to him, such an event would lead to a spike in oil prices, subsequently pushing up other energy prices as nations seek alternative energy sources to power their economies.
In this situation, Hayes foresees a bullish trend for Bitcoin, stating that its fiat value would experience a significant increase.
Hayes also discussed the impact on mining profitability, explaining that adjustments would be made through difficulty changes. If the hashrate decreases, mining difficulty would also decrease, making it more feasible for new miners to enter the market and mine Bitcoin at profitable rates despite higher energy prices.
Drawing parallels to historical examples of commodity gains during oil crises in the past, Hayes highlighted the significant price surges experienced by oil and gold during the Arab oil embargo and Iranian revolution from 1973 to 1982. Oil prices skyrocketed by 412%, closely followed by a 380% increase in gold prices.
Although Bitcoin did not exist during these crises, Hayes suggested a potential correlation between Bitcoin and commodities in times of inflation.
While oil prices have been on a decline recently, Bitcoin has seen a robust increase of over 8% in a week, reaching levels above $68,000 for the first time since July.
In the midst of geopolitical uncertainties and mounting tensions in the Middle East, investors have turned to safe-haven assets like gold, which hit an all-time high of over $2,700 per ounce this week.
As the world braces for potential global disruptions, experts recommend considering alternative investments like Bitcoin and gold to hedge against economic volatility.
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