Bitcoin jumps amid US-Iran tensions escalation - safe-haven narrative or coincidence?

Bitcoin retreated to the support area at $6,800 during early Asian hours on Friday; however, the sell-off proved to be short-lived as the first cryptocurrency performed a U-turn and regained the ground in a matter of hours. Notably, after a short period of range-bound trading around $7,200. BTC/USD resumed the recovery and surpassed the $7,300 barrier. At the time of writing, BTC/USD is changing hands at $7,360. The further upside is limited by SMA50 (Simple Moving Average) daily on approach to $7,400.

Geopolitics back in play

An airstrike at Baghdad's airport that has reportedly killed top Iranian commander General Qasem Soleimani, the head of the Iranian Revolutionary Guards' elite Quds Force, shook the global markets and caused a strong rally of oil prices. Gold, Treasuries and yen also grew strongly.

A prominent economist and a vocal cryptocurrency critic Nouriel Roubini wrote on his Twitter:

 Military conflict between the US and Iran would drive oil prices above $100 per barrel, triggering stagflation...That, after all, is what happened in 1973..., in 1979...and in 1990.

However, Mr. Doom did not factor Bitcoin in the equation. The cryptocurrency may become one of the beneficiaries of the geopolitical tension escalation along with such traditional safe-havens as gold and Treasuries. 

A safe-haven narrative may increase appetite for Bitcoin, which is often referred to as digital gold. The same happened in 2018 amid US-China war of tariffs, where a tit-for-tat policy of two global superpowers helped push Bitcoin towards $14,000. 

The correlation is not clear

Meanwhile, the correlation between risk sentiments and Bitcoin prices is not as straightforward as with traditional assets. Thus, according to economist Alex Krüger, the airstrike has nothing to do with Bitcoin's growth.

Talking heads will soon be discussing how bitcoin is a safe haven and is going up because of Iran. Which is absolute nonsense. 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 also pointed out that initially people discussed potential bearish consequences of the Iran news for the cryptocurrency market. This behavior underlies the speculative nature of the recent market movements, where industry players try to slant facts in favor of their narrative.