Can It Outperform Gold During Geopolitical Crises?

Bitcoin experienced volatility on Friday following the airstrike by Israel on Iran. The intensification of conflicts shook the world markets, resulting in substantial corrections for the cryptocurrencies. Bitcoin, which was above $107,000 since June 9, briefly fell under $103,000. At the time of press, BTC is at $104,815, showing a 2.23% decrease over the last 24 hours.

The market’s performance amid geopolitical tensions has raised doubts about Bitcoin as a safe-haven asset. Gold supporter Peter Schiff was swift to highlight the difference between Bitcoin and conventional assets in a crisis. Amidst a 5% rise in oil prices and a 1.5% fall in S&P futures, Bitcoin fell by 2%.

The remarks of Schiff challenged Bitcoin as digital gold. He pointed out that investors rushed towards the gold, causing its price to increase by 0.85%. Conversely, Bitcoin lacked resilience, which brought into question its suitability as a store of value during turbulent periods.

Bitcoin Outperformed Gold and Stocks in Crisis

The Bitcoin enthusiasts, however, were quick to disagree with this narrative. Blockstream CEO Adam Back pointed to past performance to reveal that Bitcoin has beaten traditional assets following past geopolitical crises. He pointed out that even though Bitcoin is prone to short-term decline, it tends to rebound, and usually with greater strength than gold and equities.

This argument can be substantiated through a historical analysis of how Bitcoin performed during times of crisis. As an illustration, when US-Iran tensions escalated in January 2020, Bitcoin increased by 20% over the following two months. This beat gold, which rose 6%, as well as the S&P 500, which fell 7%.

Likewise, following the onset of the Russia-Ukraine war in 2022, Bitcoin returned 15 %over 60 days, compared with gold, which returned 9%. Amid the banking crisis in the US in March 2023, Bitcoin rose by 32% over the next two months. Gold increased by 11% and equities only by 4%.

Bitcoin’s Resilience and Path to Traditional Finance

The performance of Bitcoin through such events demonstrates that it can rebound and surpass the conventional markets. As seen in the case of the COVID-19 outbreak, Bitcoin declined by 25% but then increased by 21% over the next two months. The most notable was in the 2020 US election, where Bitcoin surged 131% in 60 days.

Some industry participants, such as Andrei Grachev, acknowledge that cryptocurrency would benefit from being more integrated with traditional finance. Grachev proposed a Nasdaq listing as a way of gaining the interest of conventional investors. The step may give the crypto market greater stability and longer-term institutional backing.

Although the recent fall of Bitcoin following geopolitical tensions raised concerns. The asset’s track record during previous crises suggests that it could still rally and surpass conventional assets.

Related: Crypto Crash Caused by Israel-Iran Conflict: Prices of Bitcoin, Ethereum, and XRP Drop Sharply