BitMEX co-founder Arthur Hayes predicts Bitcoin's price will rise alongside surging oil and energy prices if tensions between Iran and Israel boil over.
According to Arthur Hayes, co-founder of the cryptocurrency exchange BitMEX, Bitcoin prices are likely to increase if rising tensions in the Middle East lead to a surge in oil and energy prices.
In a blog post dated October 16, Hayes indicated that a significant escalation in conflict between Iran and Israel, particularly involving attacks on major oil and natural gas fields, would result in a sharp increase in oil prices. He noted that this situation would subsequently elevate all other energy prices, as countries facing oil shortages would resort to alternative energy sources to sustain their economies.
He further remarked, "What happens to the fiat price of Bitcoin? It pumps."
“Bitcoin is stored energy in digital form. Therefore, if energy prices rise, Bitcoin will be worth more in terms of fiat currency.”
Hayes said that mining profitability would adjust through difficulty changes, however, if the hashrate drops, the mining difficulty will also, “which makes it easier for new entrants to mine Bitcoin at higher energy prices profitably.”
Hayes provided a historical example of large gains in commodities from 1973 to 1982 during the oil crises caused by the Arab oil embargo and the Iranian revolution. Oil prices rose 412% and gold rose 380%, nearly matching oil's increase.
While Bitcoin BTC
$68,422 didn’t exist during these oil crises, it has shown some correlation with commodities during inflationary periods.
Should Middle Eastern oil be removed from the market “the Bitcoin blockchain will continue to function, and the price will, at minimum, hold its value vs. energy and definitely rise in fiat currency terms,” he said.
Oil prices have fallen this week with West Texas Intermediary dropping by around 3.7% since Monday to $71.09 per barrel on Oct. 17, according to Oilprice.com.
Meanwhile, Bitcoin gained more than 8% over the week, topping $68,000 for the first time since late July in early trading on Oct. 18.
Gold prices reached a record high this week, climbing to $2,711 per ounce on October 17, as reported by GoldPrice.org.
This increase is attributed to investors seeking safe-haven assets in light of the uncertainty surrounding the forthcoming US election and escalating tensions in the Middle East.
Israel has announced its intention to retaliate against Iran following an attack earlier in October. In response to Israeli airstrikes targeting Iranian-backed Hezbollah militants in Lebanon, Iran launched approximately 180 missiles.
"Gold is frequently viewed as a refuge during uncertain times," stated Nitesh Shah, a commodity strategist at WisdomTree, in an interview with Reuters on October 18.
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