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What Causes Bitcoin Prices to Rise Suddenly?

As the world is anxiously witnessing turbulent events in the Middle East this week, investors have turned to safe havens for the crisis. Throughout history, gold has been a proven investment vehicle during similar difficult times, from war to crisis to economic depression.

However, during the past week, we have seen important developments that must be carefully analyzed. The increasing turmoil in the Middle East triggered a much anticipated event, which enabled the gold digital heir to show its intensity and strength for (almost) the first time. Who is this heir? Bitcoin, of course.

The assassination of Iranian general Qasem Soleimani and Iranian missile attacks on US forces in Iraq led to aggressive statements by the US President and Iranian leaders, and raised genuine concern about the possibility of escalation that crossed into other parts of the world.

The headlines “Third World War” were even seen in certain media outlets. Short and sharp investor response: global stock markets are falling, and everyone is rushing for financial protection, many are buying Bitcoin.

Throughout history, the recognized investment objective in such situations has been Gold: a rare asset that retains its value, and is free from potentially harmful effects from governments and therefore the ordinary market. And indeed, this week Gold reached a seven-year high (along with rising oil prices, also directly related to events in the Middle East).

A far more unpredictable result is the sharp jump of Bitcoin to more than 20% in just a few days, less than IDR 102 million to IDR 115 million.

At the time of the press, the price of Bitcoin was at Rp 109 million, according to Indodax.

With every devastating new headline, Bitcoin bounces even further. The fact that along with gold has since declined slightly, because the news from the US-Iran front has become more subside, only reinforces the fact that Bitcoin has demonstrated its role as a digital shelter for investors.

Bitcoin features a significant advantage over gold, because of its digital and decentralized nature, which promises smarter and more sophisticated alternatives for investors. It enjoys the uniqueness of gold as an investment tool with perfect value-saving characteristics, thanks to its rarity, with a maximum supply of 21 million coins.

In addition, BTC is very different from gold, Bitcoin and other cryptocurrency can be transferred around the world, in a few minutes or hours, without censorship or intervention in any form by third parties.

Recent years have shown growing evidence that Bitcoin is a useful and active investment tool in difficult situations around the world. Investors are looking for ways to keep their money separate from the unknown effects of the government and the negative situation in the capital market and ordinary consumers. For example, Bitcoin is increasingly getting used in countries in severe economic crises, like Venezuela.

The trade war between the US and China is still looming over the global market. Piles of trillions of dollars in debt and weakening of traditional money raise fears of a coming financial and monetary crisis.

And if that is not enough, fragile economic growth even in the strongest countries does not promise a bright future. Under such conditions, it are often expected that the look for investors for alternative assets, like Bitcoin and other cryptocurrency – are going to be stronger within the future. Let’s wait and see.

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