Bitcoin Falls as Biden Supports Potential Israeli Strikes on Iranian Oil Facilities

Bitcoin and altcoins continued their downward trend while crude oil prices surged, as concerns over a potential escalation in the Middle East intensified.

Bitcoin Dips Below $60,000

Bitcoin (BTC) dropped by 3.06%, falling below $60,000 for the first time since September 16, following U.S. President Joe Biden’s signal of potential support for Israel targeting Iranian oil facilities, according to a report by Barron’s. This news triggered a market-wide selloff, with several top cryptocurrencies, including Ethena (ENA) and Conflux (CFX), plunging by 20.25% and 14.25%, respectively. Beam (BEAM) also dropped over 15%, placing them among the worst performers in the top 100 cryptocurrencies.

Crude Oil Prices Spike Amid Middle East Tensions

As cryptocurrencies slumped, crude oil saw a sharp rise. Brent crude and West Texas Intermediate (WTI) surged over 4%, reaching $76.5 and $73 per barrel, respectively. U.S. stock indices like the Dow Jones and Nasdaq 100 reversed earlier gains, dropping by over 50 basis points (bps).

Potential Escalation Raises Concerns

Biden’s statement heightened fears of a broader conflict in the Middle East. According to The New York Times, senior Israeli officials indicated that the nation is prepared to engage in military action against Iran. Speculation about an imminent strike has increased, with traders on Polymarket now pricing a 63% likelihood that Israel will attack Iranian oil facilities this month.

A prolonged conflict in the region could significantly impact global markets, especially cryptocurrencies. Iran, which exports over 1.3 million barrels of oil per day, plays a crucial role in global energy supplies. The Red Sea, vital for shipping, could see disruptions, further straining supply chains and driving up oil and gas prices.

Ripple Effects on Inflation and Interest Rates

An extended Middle East conflict would likely exacerbate inflation, as higher oil prices ripple through global economies. This could complicate ongoing interest rate policies from the Federal Reserve and other central banks.

Bitcoin's Resilience During Crises

In a recent analysis, BlackRock highlighted Bitcoin’s resilience in the face of geopolitical crises. The report cited six significant events—such as the U.S.-Iran tensions, the COVID-19 pandemic, the 2020 U.S. election challenges, Russia's invasion of Ukraine, the U.S. banking crisis, and the yen carry trade unwinding—during which Bitcoin outperformed both the S&P 500 and gold over a 60-day period.

BlackRock analysts also pointed to Bitcoin's long-term growth potential, driven by several key factors, including the U.S. debt situation, its historical outperformance, its status as an uncorrelated asset, and its fixed supply of 21 million coins.

Bitcoin as a Hedge Against Inflation

Prominent voices like Michael Saylor have reiterated that Bitcoin is likely to evolve into a powerful hedge against inflation, particularly in periods of economic and geopolitical uncertainty.