Bitcoin dumps as Biden supports Israel hitting Iran oil facilities

While Bitcoin and altcoins continue their downward trend, crude oil prices have risen as the possibility of a broader crisis in the Middle East increases.

Bitcoin (BTC) fell below $60,000 for the first time since September 16 after Joe Biden hinted that he would support Israel striking Iranian oil facilities, according to Barrons. Other altcoins such as Ethena (ENA), Conflux (CFX), and Beam (BEAM) were the worst performers in the top 100, falling over 15%.

Meanwhile, crude oil rebounded, with Brent and West Texas Intermediate rising over 4% to $76.5 and $73, respectively. American indexes such as the Dow Jones and Nasdaq 100 reversed earlier gains and fell more than 50 basis points.

Biden’s statement raises the risk of a broader conflict in the Middle East. A New York Times report said senior Israeli officials said the country was ready to go to war with Iran. Polymarket traders see a 63% chance of Israel attacking Iranian oil this month.

A protracted war in the Middle East would have a major impact on all asset classes, including cryptocurrencies.

Oil and gas prices will increase as Iran exports more than 1.3 million barrels of oil per day. It will also lead to disruptions in the supply chain due to the importance of the Red Sea in the shipping industry.

Higher inflation will impact the ongoing interest rate cycle of the Federal Reserve and other central banks.

Bitcoin holds up well in times of crisis

In a recent note, three Blackrock analysts wrote that Bitcoin has fared better than other assets during periods of geopolitical trouble.

They cited six major events, including the escalation of tensions in the US and Iran, the Covid-19 pandemic, the 2020 US election fight, Russia’s invasion of Ukraine, the US banking crisis and the yen, which led to an easing in trade. In all these events, Bitcoin outperformed the S&P 500 index and gold over the 60-day period.

S&P 500, gold and Bitcoin performance with major events | Source: Blackrock

Blackrock also noted that Bitcoin has more potential catalysts that could push it higher in the long term. The most notable were the US’s debt dynamics, its longstanding outperformance, its uncorrelated asset situation, and its 21 million supply cap.

Other analysts, including Michael Saylor, have noted that Bitcoin will eventually become a hedge against inflation.