Bitcoin’s value may surge if oil and energy prices increase due to escalating Middle East tensions, suggests Arthur Hayes, co-founder of crypto exchange BitMEX. Hayes surmises that significant attacks on major oil and natural gas fields during a heightened conflict between Iran and Israel could spike oil prices, subsequently elevating other energy prices as nations short on oil turn to alternate energy substitutes.
Hayes sees a potential positive effect on Bitcoin, viewing it as “stored energy in digital form”. Consequently, if energy prices climb, Bitcoin’s worth, in terms of fiat currency, could see a significant rise. Hayes maintains that even if the hashrate drops, the mining difficulty changes will level the playing field, allowing new Bitcoin miners to mine at higher energy prices but still make a profit.
In his blog post, Hayes harks back to the commodity gain phase between 1973 to 1982 during the oil crises provoked by the Arab oil embargo and the Iranian revolution. During that period, oil prices jumped by 412% and gold increased by 380%, almost mirroring the spike in oil prices.
Bitcoin, though non-existent during those oil crises, has demonstrated some correlation with commodities during times of inflation. Hayes firmly believes that if Middle Eastern oil is removed from the market, the Bitcoin blockchain will continue to function. He predicts that the price of Bitcoin will at least maintain its value against energy and will certainly rise in terms of fiat currency.
Hayes’ predictions come in a week when oil prices have dropped by around 3.7%, with West Texas Intermediary landing at $71.09 per barrel. Conversely, Bitcoin has seen over an 8% gain over the same week, hitting an all-time high of over $68,000, while gold prices reached a record high of $2,711 per ounce amid investors’ increasing attraction towards safe-haven assets due to rising Middle East tensions and uncertainties around the upcoming US election.