It was reported that Bitcoin did not immediately respond to the publication of the drone attack. The function of crypto-asset reaction to geopolitical events is not yet clear.
The news on the bombing by the USA, in which General Qasem Soleimani of Iran died, led Bitcoin’s price to suddenly increase. Some analysts conclude that the conflict influenced the price of the pioneering cryptocurrency. However, Coin Metrics recently notes that this influence in Bitcoin’s price should be considered and analyzed with caution since the function of cryptocurrency market reaction to macroeconomic and geopolitical events is not yet completely clear.
The Coin Metrics analysis, published on January 7th, in the section that provides information on market data, refers to the study of the reaction of Bitcoin’s price to the drone attack conducted by the USA in Iraq on January 2nd. In this regard, the document notes that Bitcoin’s price did not immediately respond to the disclosure of the drone attack whilst the prices of oil and gold did.
The document shows how oil and gold prices rose immediately, reacting to the news on the attack that had been circulating since January 3rd, but the response of Bitcoin’s price did not occur until three hours after the first initial reports arrived.
The analysis states that there was a sharp increase about three hours after the initial reports began arriving, suggesting a delayed reaction or spurious connection. Oil, gold, and Bitcoin have increased markedly since the incident, adding some support for Bitcoin to respond positively to such events.
Truth or Dare Question
The cryptoanalysis group Messari recently published a chart showing a timeline of how the main events that have surrounded the Iran-US struggle could be related to the movements of Bitcoin’s price. The publication includes the comment, “Bitcoin and the Iran conflict: is USD BTC being converted into Digital Gold (GOLD)?” As though it were a question of the popular game Truth or Dare, the debate opened around the subject
The Messari chart shows a timeline of how Bitcoin’s price increased a few hours after the US attack. The rebound between the time of the attack, on the night of January 2nd, and the retaliation of Iran against a US military base in Iraq was 21.7%, according to Messari’s calculations. At the time of writing this article, Bitcoin’s price stands at USD 7,997, according to CoinMarketCap figures.
In the thread of that tweet, several users commented on giving reasons and opinions. Adam Pokornicky, CIO of Cryptochain Capital, believes that the USD 500 billion in Tether (USDT) curiously issued to pump BTC are going to be ignored just like what happened with China’s announcement of its blockchain.
In a veiled criticism of the Messari chart, the user FitzGibbon attributes the different points of the evolution of the Bitcoin price chart to the latest incidents among members of the British royal family. Other users argue that a one-week period is too short to establish a cause-and-effect relationship between the Iranian-American conflict and the price of the pioneering cryptocurrency.
By Alexander Salazar