Bitcoin Price Jumps 8% and Gold Hits a Four-Month High, Is Tension in the Middle East the Driving Force?
- Middle East tension spurs demand for safe-haven assets
- Dow Jones hits fresh record high as well
Trading volume meanwhile is still low at $378 million though up from less than $200 million earlier this week.
As for the next move, trader Livercoin said,
“If the two supports below us hold (7225, 7160), which I expect them to, next target is the resistance above the deep unswept swing highs (7530).”
Middle East Tension Spurs Demand for Safe-haven Assets
Just like digital gold, bullion continued its ascent, climbing to four months high. Currently, gold is trading at $1,548 per ounce just inches away from Sept. high of $1,550.
Gold gained strong traction amid the reviving safe-asset demand as escalating geopolitical tension in the Middle East triggered a wave of global risk-aversion trade. This provided a strong boost to the traditional safe-haven asset class, like gold.
Tension in the Middle East intensified on reports that US airstrike killed Iranian general Qaseem Soleimani who led the Revolutionary Guards’ Quds force. Iran’s supreme leader then vowed that “severe retaliation” awaits those who killed the commander further heightening tensions.
The risk-off mood and a sharp fall in the US Treasury bond yields further played a part in the jump in yellow metal’s price.
In determining the commodity's next directional move, the key focus will be on the latest FOMC monetary policy meeting minutes.
So, Did Iran played a part in Bitcoins’ Spike too?
Given that demand for safe-haven assets has risen, it would be assumed that Bitcoin is also influenced by the Middle East’s geopolitical tensions.
But economist and trader Alex Kruger say this isn’t the case. The move-in Bitcoin, he notes came out four hours after all other assets.
“Talking heads will soon be discussing how bitcoin is a safe haven and is going up because of Iran. Which is absolute nonsense,” said Kruger.
“Round numbers are there to get run over, in both directions. I have a small long so I'll be happy if speculators use the narrative to push prices up,” he added.
The amount of narratives I’m seeing right now to describe this $btc pump 🤦🏽♂️😂
— Altcoin Psycho (@AltcoinPsycho) January 3, 2020
The pump has nothing to do with the war stuff, both sides being apes rn lol
— Crypto Loomdart (@loomdart) January 3, 2020
Dow Jones Hits Fresh Record High too
US stock index futures made a new all-time high on Thursday, with the Dow Jones hitting 28,868 on the back of a strong performance in the tech sector.
However, the optimism entering the market on the new year seems to be fading now as they were sharply lower Friday morning after the US confirmed the airstrike. Dow futures dropped 270 points, futures on the Nasdaq and S&P 500 were also lower. But oil prices rose by about 4%.