Bitcoin Thrives Amid Global Conflicts, But Its Limits Are Tested

Bitcoin’s price may falter in the face of geopolitical conflict, but history shows it often rebounds. As global tensions escalate, from the Israel-Gaza war to Russia’s involvement in Ukraine, many wonder whether Bitcoin can maintain its reputation as a “safe haven” asset.

Bitcoin Drops but Recovers Fast

Bitcoin’s price is sensitive to market sentiment, and conflicts typically spark short-term dips. For instance, when Iran attacked Israel in April 2024, Bitcoin dropped by 8.4%. However, according to Andre Dragosch, head of research at Bitwise’s ETP platform ETC Group, Bitcoin usually rebounds within 50 days, often surpassing its pre-conflict levels. This resilience is why many see Bitcoin as a hedge against uncertainty, even when traditional assets like gold may seem safer in the short run, as Cointelegraph reports.

Geopolitical Conflicts Stir Up Inflation Concerns

Bitcoin’s appeal grows when inflation surges, which is often triggered by geopolitical conflicts. Mithil Thakore, co-founder of Velar, believes that while Bitcoin might suffer during the early days of a conflict, it typically rallies once the initial shock wears off. “If you can resist the urge to panic sell, you’ll be rewarded for your conviction,” Thakore said to Cointelegraph. He points out that Bitcoin thrives in environments with abundant liquidity and inflationary pressures.

Bitcoin’s Limits in Global Crises

Yet, Bitcoin’s strength has limits. While it serves as a hedge during localized conflicts, it may not fare as well during global crises. As José Almeida, researcher at Lisbon School of Economics and Management, explained to Cointelegraph, Bitcoin’s appeal grows in localized tensions but falters when global uncertainty strikes. If tensions escalate to a worldwide scale, Bitcoin could become too volatile for many investors seeking stability.

At the time of writing, BTC is sitting at $97,212.43.