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JPMorgan: Iran-Israel escalation benefits gold and Bitcoin
By Davide Grammatica
Geopolitical tensions, according to JPMorgan, could prompt investors to target Bitcoin and gold as “safe haven” assets
Bitcoin in wartime
The factors that are affecting the path of Bitcoin, in recent months, are many. Removed from those of a macroeconomic nature , however, to assume increasing relevance in this period seem to be (geo)political factors .
The escalation of the conflict in the Middle East between Israel and its neighbors coincides with the approach of the U.S. elections, making for a lethal mix that can only be decisive for BTC’s price performance.
All of these elements have, interestingly enough, a lowest common denominator, namely actively contributing to making the dollar “weaker” at an already complicated time because of inflation and the Fed’s consequent monetary policies.
Precisely for this reason, according to JPMorgan, “safe haven” assets (and primarily Bitcoin and gold) could benefit indirectly precisely from the ongoing conflicts, which drive investors to fuel the so-called “debasement trade.”
“Rising geopolitical tensions and the upcoming U.S. elections are likely to reinforce what some investors are calling a ‘debasement trade,’ thus favoring both gold and bitcoin,” JPM analysts say in an official note relaunched by The Block.
BTC in the wake of gold
The effect can already be seen now. Gold approached just at the end of September the $2,700 mark , and the cause would be found precisely in the 4-5 percent drop in the dollar in conjunction with a significant drop in U.S. Treasury bond yields. Growing investor uncertainty, inflation concerns and the deficit do the rest.
Is the decrease in the 13-week Treasury yield driving up prices?
In 2008, as the 13-week Treasury Bill Yields started to lower, gold prices soared from $590 to a peak of $1900 per ounce in 2011.
In 2024 a similar trend is occurring, with gold rising from $2000 to nearly $2700.… pic.twitter.com/zTPbeWUqeP
— CryptoQuant.com (@cryptoquant_com) October 1, 2024
That the rise in the price of gold historically coincides with the decline in government bond yields, then, seems a given, as happened, for example, from 2008 to 2011.
Contradicting this view, so far, seems to be only the price of BTC these days, which despite the similar nature of the asset still seems to lag gold.
