As you may have seen on Friday, Bitcoin had a massive crash. It very briefly dropped to $102,650 on Binance when news hit that Israel had launched airstrikes against Iran. Looking back at history shows that this drop could be another great buying opportunity for long-term investors. BTC proved resistant during earlier periods of geopolitical upheaval. In fact, it often outperforms classic inflation hedges like gold and the S&P 500.
In fact, since 2010 Bitcoin has consistently averaged a 64.6% price increase within 50 days of major geopolitical events. The median gain in those instances is 17.3%. This historical precedent indicates that the current market negative reaction might be indeed short-lived, with significant gains possibly around the corner.
Data from on-chain platform CryptoQuant supports this view, which indicates Bitcoin is back in buy territory. The Puell Multiple, a useful metric for considering Bitcoin’s overall market valuation, is approaching an area where it has previously suggested discounted price levels.
Bitcoin’s price recovery since each significant downside catalyst has been nothing short of amazing. Similar to 2020, Bitcoin has been very sensitive to key macro developments. In fact, following the U.S.-Iran escalation of tensions in January 2020, it posted a historic 20% increase. This capacity not just to recover but grow amidst global tumult underscores Bitcoin’s emerging role as a stabilizing asset.
Therefore, the current scenario represents a potential window of opportunity. The combination of a historically high price and still conservative fundamentals reinforces that the upward cycle may only be half over. - CryptoQuant
An October 2020 study adds to these findings, bolstering the case for Bitcoin’s resilience in the wake of geopolitical turmoil even more. After the latest airstrikes released this week, oil prices jumped by 5%. At the same time, Bitcoin’s track record indicates that in the same scenario, it tends to perform better than traditional safe-haven assets.
