- Gold and oil prices surged following a missile strike by Iran on Israel, signaling investor moves toward safer assets.
- Bitcoin dropped 3%, questioning its status as a safe-haven asset amid geopolitical tensions in the Middle East.
- U.S. dollar and bonds gained strength, while major tech stocks like Apple and Nvidia also faced declines.
Tensions in the Middle East have caused a sharp rise in commodity prices, with gold and crude oil experiencing notable gains. Gold rose 1.4% on October 1 to reach $2,665 per ounce, nearing its all-time high, while crude oil spiked by 7% to $72 per barrel. The rise followed a major missile attack by Iran on targets across Israel late that day, with most of the 180 missiles being intercepted by Israel’s air defenses, according to reports.
Investors Seek Safe Assets
The escalating conflict has led investors to turn to safer assets, causing gains in gold, bonds, and the U.S. dollar. Financial strategist Li Xing commented that gold’s appeal increased due to broader market uncertainty. Bitcoin, often called a safe-haven asset, did not follow this trend. Instead, it fell by over 3%, dropping from an intraday high of $64,000 to $60,315 before recovering slightly to $61,800.
This downturn led to the liquidation of approximately $521 million worth of Bitcoin positions, impacting 154,770 traders, as reported by Coinglass. It wasn’t the first time Bitcoin reacted negatively to geopolitical tensions. A similar pattern emerged in April when Iran launched a drone attack on Israel, causing an 8% drop in Bitcoin prices.
Debates Over Bitcoin’s Role
The sharp contrast in market reactions has reignited debates over Bitcoin’s role as a safe-haven asset. Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, suggested that investors were selling Bitcoin in favor of gold. Precious metals analyst Jesse Colombo stated that geopolitical fears often lead to declines in cryptocurrency markets, unlike precious metals. Colombo added that this supports his belief that crypto assets are not safe havens but are instead high-risk investments similar to tech stocks.
Major U.S. tech stocks, including Apple and Nvidia, also saw losses of around 3%, and the Nasdaq 100 dropped by over 2%. BlackRock CEO Larry Fink previously noted that Bitcoin might serve as an alternative inflation hedge, though it is still evolving in this role.
Markus Thielen, head of research at 10x, explained that Bitcoin was originally designed as a peer-to-peer cash system rather than a safe-haven asset. He mentioned that Bitcoin is still maturing and may one day serve as a substitute for gold if governments prohibit individual gold ownership. Until then, Bitcoin’s value will likely be influenced by broader economic conditions, which currently remain uncertain.
