Bitcoin prices are climbing back towards $70,000 after a gradual March 7 slide culminated in a dramatic but short-lived drop to $66,000. Bitcoin is currently trading at $67,308.
Analysts are divided on the short-term fate of Bitcoin prices, with some claiming a renewed bullish sentiment is about to take grip of the markets — and others warning of deeper price drops ahead as the war in the Middle East rumbles on.
“When geopolitical volatility affects financial markets, Bitcoin should be expected to behave like a high-beta risk asset in the short run,” John Haar, managing director at the financial services provider Swan Bitcoin, told DL News. In the traditional financial world, high-beta assets are typically volatile shares in sectors such as technology or small-cap stocks.
“But in the medium and long run, Bitcoin has shown its price is determined more by its monetary properties and increasing adoption,” Haar said.
Bitcoin rose above the $73,000 mark midweek — prices not seen since before the conflict began, with some experts forecasting Bitcoin prices to rally higher should hostilities continue.
Fund movements key
Experts agree that crypto price movements now largely hinge on the confidence of traditional investors who want exposure to Bitcoin through traditional financial products such as funds.
“The recent move in Bitcoin can largely be attributed to renewed institutional demand entering the market through spot exchange-traded funds,” Orkun Mahir Kılıç, co-founder of the blockchain firm Citrea, told DL News. “ETFs are increasingly acting as the main gateway for traditional capital.”
While ETF traders were bullish at the start of last week, ploughing over $900 million into BlackRock’s iShares Bitcoin Trust, or IBIT, from Monday to Wednesday, uncertainty took grip on Thursday-Friday.
Farside Investors data shows IBIT investors sold off $143.5 million worth of shares on Friday, with Bitcoin ETF investors dumping a total of $349 million.
Iran-related risks could “push Bitcoin lower” and even drive down the price of so-called safe-haven assets like silver from its peak, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, per a report from South Korea’s Seoul Kyungjae.
McGlone said Bitcoin could drop to $50,000, with silver falling to $50 per ounce.
However, industry players say global crises will inevitably lead to a rise in crypto adoption.
“In the near term, Bitcoin often trades as a risk asset and reacts to macro shocks like the recent Iran crisis, Jordan Jefferson, founder of the Dogecoin wallet MyDoge, told DL News. “But every sanctions crackdown, banking freeze, and currency failure reinforces the long-term argument for permissionless financial infrastructure. And we’re seeing several play out right now.”
Jefferson explained that historical examples from the Middle East show that citizens intuitively seek crypto-powered solutions to failures in the conventional financial system.
“When Lebanese banks froze withdrawals in 2019 as the Lebanese lira collapsed, crypto became one of the only ways to transact and store value, and adoption surged,” he said.
