Arthur Hayes predicts that Bitcoin’s price will increase if tensions between Iran and Israel escalate and lead to rising oil and energy prices.
In a blog post, the founder of the BitMEX exchange explained that if major oil and natural gas fields were attacked during a conflict, it would cause oil prices to spike.
Bitcoin is a global safe haven?
Hayes shared that such a scenario would push all energy prices higher as countries short on oil would need to find alternative energy sources to keep their economies running.
“What happens to the fiat price of Bitcoin? It pumps.”
He explained that Bitcoin acts as stored energy in digital form, meaning that if energy prices rise, Bitcoin’s value in fiat currency will also increase.
Although mining profitability may change with fluctuations in the hashrate, Hayes mentioned that if the hashrate drops, mining difficulty would also decrease.
This adjustment would allow new miners to profitably mine Bitcoin even at higher energy prices, as this is a self-balancing method.
Gold skyrocketed along with the oil price, and this could happen again with Bitcoin
To support his argument, Hayes referenced historical data showing big gains in commodities during the oil crises from 1973 to 1982, which were triggered by the Arab oil embargo and the Iranian revolution.
During this time, oil prices skyrocketed by 412%, while gold rose by 380%, closely following oil’s increase.
While Bitcoin didn’t exist during those crises, it has shown some correlation with commodities during times of inflation.
Speculative scenarios
Hayes suggested that if Middle Eastern oil were to be removed from the market, the Bitcoin blockchain would continue to operate normally.
He believes that Bitcoin’s price would at least maintain its value against energy and likely rise in terms of fiat currency.
This week, oil prices have dropped slightly, with West Texas Intermediate falling about 3.7% since Monday to $71.09 per barrel as of October 17.
On the other hand, Bitcoin gained over 8% this week, reaching above $68,000 for the first time since late July on October 18.
Gold also reached an all-time high this week, hitting $2,711 per ounce on October 17. This jump comes as investors seek safe-haven assets due to uncertainty surrounding the upcoming U.S. election and increasing tensions in the Middle East.
