Bitcoin’s price fell by over 13% in the past week, now at around $62,000. Despite this drop, some traders foresee a possible “doomsday rally” for Bitcoin. They think that increasing tensions in the Middle East might boost the cryptocurrency’s price soon.
Bitcoin emerged after the 2008 financial crisis and has often been viewed as a hedge against geopolitical turmoil. While investors have considered it a risky asset in recent years, its correlation with the Nasdaq has varied, sometimes increasing significantly and decreasing during bullish periods.
Bitcoin Price Predictions Amidst Geopolitical Tensions
The Bitcoin-Nasdaq correlation of returns (60days) is at its lowest since 2021, and trending steadily lower.
This has been partially driven by market makers pulling back from trading crypto in the US, following the post FTX regulatory crackdown. pic.twitter.com/iaDuHcNgwz
— Alex Krüger (@krugermacro) May 23, 2023
Bitcoin is seen as a “doomsday asset” by Edouard Hindi, Chief Investment Officer at Tyr Capital, because it’s now more closely tied to gold. He believes that Bitcoin ETFs are driving a potential rally, with a forecasted surge to $120,000 soon. This prediction comes as tensions rise, especially after Iran’s recent direct attack on Israel.
Meanwhile, other forecasts, like Robert Kiyosaki’s, are even more optimistic, suggesting a price jump to $2.3 million per Bitcoin. These predictions align with a surge in Bitcoin demand, coupled with a decrease in available supply on cryptocurrency exchanges. This imbalance could lead to a supply shock, pushing prices higher.
Shift in Bitcoin Dynamics: Demand Surpasses Supply
Julio Moreno, Head of Research at CryptoQuant, highlights a significant shift in the dynamics of Bitcoin, where demand now outweighs supply. According to CryptoQuant’s data, demand from permanent holders has surpassed issuance for the first time ever.
Data from CryptoQuant reveals a steady decline in known exchange addresses holding Bitcoin. Currently, these addresses hold approximately 1.94 million BTC, which represents only 9.8% of Bitcoin’s total circulating supply of around 19.67 million coins. This decline contrasts with the peak of 2.85 million BTC seen in July 2021, indicating a trend towards long-term holding strategies among investors rather than active trading.
The diminishing supply of Bitcoin on exchanges raises the possibility of a potential supply shock in the event of a sudden surge in demand. A supply shock occurs when the available supply of an asset on exchanges decreases sharply while demand increases.
Important:Â Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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