Due to America-Israel and Iran war, the supply of crude oil has been affected worldwide. The effect of this was that there was a decline in the stock markets around the world. At such times, the demand for safe investments like gold, US dollars and government bonds usually increases. However, this time the story is a little different. Ever since Iran’s conflict with the US and Israel began, Bitcoin has emerged as one of the best performing assets. On the other hand, gold could not maintain its rise and a lot of fluctuations were also seen in the stock market.
The world’s largest cryptocurrency Bitcoin has increased by about 4% since the end of February to reach about $74,500, which is a record level for about 6 weeks. Although it declined slightly later, it has still increased by more than 12% since the conflict began, which is better than many safe investment options.
Crypto overtakes gold
Usually, in times of crisis, people first invest in gold, but this month gold has fallen by about 5%. On the other hand, Bitcoin has made gains amidst this tension. Not only Bitcoin, other cryptos have also seen a rise. As Ether rose by nearly 10%, Solana and XRP saw gains of 8 to 9%. It is clear from this that investor confidence is increasing again and the willingness to take risks is coming back.
Support provided by improvement in oil market
After the record rise, there is a slight decline in crude oil prices and the expectation that the supply from the Strait of Hormuz may return to normal. All this has supported the market. Not only small investors, big investors are also coming back. More than $763 million was invested in US-listed Bitcoin ETFs last week. Total investment in March has reached above 1.3 billion dollars. Funds like iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund are continuously inflowing money, which shows that even big investors are now taking interest in crypto.
Why didn’t the gold shine?
This time gold could not give much benefit, there are some reasons behind this. The US dollar strengthened, making gold expensive. Fear of inflation increased due to oil prices. This reduced expectations that America would reduce interest rates soon. When interest rates remain high, gold becomes less attractive because it does not earn any interest.
Is Bitcoin a safe investment now?
It is too early to say that Bitcoin is now a safe investment. Earlier Bitcoin was considered a risky asset. Which increases a lot in the upswing and falls rapidly in the downswing. Right now its behavior seems a little different, but it has not become a completely safe investment. Trading in crypto often increases around the time of major global events, suggesting that investors use it as an opportunity, not as a forever safe option. Many experts still do not consider it completely safe, because it is not supported by the central banks. It does not have the stability of gold.
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