Bitcoin’s price jumped 4% to strike above $71,600 on Monday after US President Donald Trump announced that his administration is having “very good and productive conversations” with Iran on ending the conflict.
Trump took to Truth Social just before noon, London time, to say that on the back of those talks, he had postponed “any and all military strikes against Iranian power plants and energy infrastructure for a five day period, subject to the success of the ongoing meetings and discussions.”
Tehran, however, has denied that those talks have taken place.
“We deny what US President Donald Trump said regarding negotiations taking place between the United States of America and the Islamic Republic of Iran,” Iran’s foreign ministry said in a statement.
Even so, Trump has, in subsequent conversations with the press, doubled down on the statement, telling the AFP news agency that “things are going very well.”
This latest back and forth comes as markets have been rattled by the ongoing war in the Middle East since the US joined Israel in attacking Iran on February 28, triggering the conflict.
Since the outbreak of war, Iran has barricaded the Strait of Hormuz, a key artery for the flow of oil. As a result, oil prices have shot through the roof.
Brent crude is up some 44% since the beginning of March. Yet, it slumped some 9% to $101 after Trump issued his statement.
Bitcoin, by comparison, has remained far less affected and has traded around $70,000 for most of the last month.
The conflict could help the cryptocurrency “outperform” other assets as Bitcoin proves itself a key hedge against the dollar, David Brickell, head of international distribution at FRNT, an institutional capital markets and advisory platform, told DL News earlier on Monday morning.
Bitcoin “is the ultimate hedge against the failure of existing economic and political structures given its non-sovereign, immutable, borderless characteristics,” Brickell said.
To be sure, Bitcoin could also suffer from the war. A growing fear is that the conflict will trigger a recession. If that happens, most central banks are unlikely to cut interest rates and pump more liquidity into markets.
Low interest rates are usually seen as a boon for risk-on assets like Bitcoin.
The Federal Reserve has already signalled that it is more unwilling to cut interest rates and some traders are already betting on it to hike rates later this year.
“A prolonged conflict in the Middle East would generally be negative for Bitcoin,” Georgii Verbitskii, founder of the crypto trading platform TYMIO, told DL News on Sunday. “Any disruption to global trade routes increases uncertainty across financial markets.”
This uncertainty will put pressure on equities, Verbitskii said.
“Bitcoin is still highly correlated with risk assets, particularly US stock indices. When those markets come under pressure, Bitcoin usually follows.”
