The United States has done what it has always been known for: the world’s policeman. This, of course, has various consequences for the rest of the world. The recent killing of the commander of Iran’s revolutionary guards has grave consequences on the Arab country and some parts of the world.
Firstly, the Islamic Republic of Iran is one of the world’s largest producers of crude oil. It has already been proven that Iran holds about 10% of the world’s global oil reserves and about 15% of natural gas. This alone is a proof-of-concept that as a Country, the Islamic Republic, holds a seat at the table when it comes to determining energy prices.
Oil prices have already jumped indicating that lower production outputs due to imminent conflict between the United States and Iran already show that we are in for a bumpy ride in 2020 in that regard.
With the most sensitive trading route in the world (the strait of Hormuz) and an already heated Middle East is driven by the Yemeni war, the Israeli-Palestinian situation, and the Saudi-Iranian conflict, Oil price is already taking its flight.
However, there are suggestions that Bitcoin prices could follow this trend as well because traditional markets are already in chaos. Investors will seek a haven for their assets as global chaos ensues.
The Iranians already have a love-hate relationship with cryptocurrencies. The use of cryptocurrencies to evade sanctions is already one way that they have considered at the state level. The restriction on Bitcoin trading and mining also indicates a level of state-control over digital assets. This, in turn, takes the global cryptocurrency adoption process to a whole new level.
Already, Bitcoin price is considered to have an uptick this year considering the next Bitcoin halving event which is just six months away. The imminent halving has made miners look for a way to mitigate their risks by lower purchases of mining equipment. An increase in hashing power suggests that the miners are considering the quality of equipment in terms of performance over quantity.
This is an important factor to consider as increase in hashing power will lead to parity in mining difficulty this year. This, of course, creates a combustible scenario where Bitcoin prices will explode exponentially while global geopolitics will ensure that new entrants into the Bitcoin market are a definite reality.
Strong Reasons Bitcoin Would Rally Upward
Bitcoin price would likely achieve new support levels. This is because of several reasons. Firstly, Bitcoin dominance is still around its all-time high of 68.2%. Secondly, the key players in Iran’s Oil sector are going to need forms of new cashflows following the recent assassinations.
Currently, the pseudonymous nature of the Bitcoin blockchain will ensure that they have access to international markets and we are going to see a shift of the settling of most of the Islamic Republic’s major oil contracts in cryptocurrencies.
The Islamic Republic may at this time also consider lifting restrictions on a limited basis on Bitcoin mining and trading within its borders to shore up its economy. If history is anything to go by, the United States is going to take a harsher stance against Iran. This will escalate beyond a war of words as key allies in the Middle East are also going to have asymmetrical forms of conflict within and outside their borders; something that the Iranians will also realign in line with the new reality on the ground: A decade of conflict is here.
The world financial system will go into another “shock and awe” series of moments this year. It is already obvious that another war in the Middle East is imminent and this time the biggest gainers will be the HODLers. So, yes, Bitcoin prices are going to rise this year and it may be higher than we think if the current global situation continues along these lines.