Bitcoin Faces Pressure as Investors Turn to Gold Amid Rising Middle East Tensions

The recent downturn in cryptocurrency markets hasn’t shaken the confidence of crypto advocates, with one expert suggesting that Bitcoin has historically outperformed gold during times of rising debt and leverage in the financial system.

Despite the selloff, Bitcoin’s reputation as “digital gold” has faced scrutiny, as its role as a hedge against stock market volatility is tested.

Bitcoin recently dropped below $63,000, part of a broader market dip that erased about $200 billion from total crypto market capitalization. This comes after Bitcoin reached a two-month high of $66,500 last Friday. However, increasing geopolitical tensions, particularly in the Middle East, are posing new risks for cryptocurrencies in the near term.

In a podcast, Lawrence Lepard, an investment manager at Equity Management Associates, shared his views on the financial system’s reliance on leverage and money supply growth. Lepard believes Bitcoin is better positioned than gold to benefit from this dynamic, citing its past performance when it surged from $5,000 to $10,000 while gold struggled around $1,365. During the early stages of the COVID-19 pandemic, gold saw a rise of 50-70%, but Bitcoin skyrocketed 300%.

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Lepard remains optimistic about Bitcoin’s future, predicting it could reach six figures by the end of the year.

Meanwhile, gold and oil prices have surged due to the Middle East conflict. Gold jumped 1.4% to $2,665 per ounce, near record levels, and crude oil prices increased by 7% to $72 per barrel. The unrest, including missile strikes in Israel, has shaken investor confidence, leading many to turn to safer assets like gold.

Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, noted a shift from Bitcoin to gold in response to escalating tensions between Iran and Israel, contributing to Bitcoin’s recent price drop. Growing fears of an expanded regional conflict have led to heightened demand for gold, further pressuring cryptocurrencies amid rising concerns of a potential global recession.

Alexander Zdravkov