Iran fires 200 missiles at Israel, wiping out $250 million in cryptocurrency. Bitcoin Is Not a Digital Gold Once more, Iran’s attack on Israel has caused the cryptocurrency market to collapse as Bitcoin has not lived up to expectations of being a digital gold mine.
Because of the cryptocurrency market’s collapse following Iran’s missile attack on Israel, Bitcoin has once again failed to establish itself as a digital equivalent of gold.
Iran responded to the assassinations of Hassan Nasrallah, the head of Hezbollah, and other individuals by firing almost 200 missiles toward Israel during the night. Some of the missiles struck the ground, including in the West Bank, but the majority were intercepted by Israel’s iron dome defense system.
However, the battle is far from ended. The Islamic Revolutionary Guard Corps of Iran took credit for the attack and threatened to launch further attacks if Israel continued to retaliate. Prime Minister Netanyahu has warned that Iran “made a big mistake” and will pay a price for it. Israel has pledged to retaliate.
Even the United States has decided to become involved and support Israel wholeheartedly, but it is still evaluating the circumstances to decide how best to react.
Fearing the worse, the bitcoin market fell upon hearing the news. Iran attacked, wiping off over $248 million in the first four hours. Bitcoin reached highs of nearly $66,000 over the weekend, but it also dropped as low as $60,780.
While Bitcoin has dropped more than 2.0% since the hack, gold has kept steady, declining about 0.3%.
Though dubbed “digital gold,” Bitcoin has never lived up to the hype. In August, we pointed out that when markets crashed and carry trades went awry, Bitcoin behaved more like stocks than gold. The notion that Bitcoin may be used as an economic hedge was disproved last month when its correlation with gold went negative.
According to some analysts, it is unrealistic to believe that institutional investors are investing in Bitcoin for the same reasons as they are in gold and that these two assets have different purposes in investment portfolios.
“Even though Bitcoin is frequently referred to as a store of value, it remains a highly volatile asset that responds strongly to risk-off sentiment,” says BRN analyst Valentin Fournier. Bitcoin had slight losses during abruptly uncertain times, such as the events of last night, while classic safe-haven investments, such as gold, saw gains.”
Fournier went on, “There are two main reasons why this happens.” “In the first place, Bitcoin was intended to be a better long-term store of wealth than a reliable short-term hedge, particularly in relation to other currencies that lose value owing to inflation.
“Second, as a relatively new asset with significant potential for appreciation, Bitcoin is still subject to considerable speculation, leading to greater price fluctuations compared to more established assets like gold.”
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