The price of Bitcoin has shattered many records in recent years, and has just hit $107,000 with momentum building around geopolitical conflicts. Gold, meanwhile, is up 90% since June 2020. Early investors of Bitcoin have made a lot of money, leaving behind new investors who may be wondering whether the price will continue to rise. Traditional investors use Bitcoin to hedge against global conflicts. As with Gold, Bitcoin can measure long-term value, with the added benefit of cutting-edge cryptography to secure a wallet address. Gold may be primed for a new high if the price breaks $3,400 per Troy ounce. The Israel-Iran conflict may have provided a new reason for investors to hedge their portfolios with Bitcoin or Gold. There has occurred a sharp escalation of conflict in the Middle East, with Israel striking Iranian nuclear facilities. Otherwise, there was positive news for markets, with the Trump administration making breakthroughs to ease tensions in the US-China trade war. However, all of the progress made has been overshadowed by conflicts involving the possibility of nuclear armament. Gold offers investors a haven if supply chains are disrupted. However, Bitcoin provides a similar service, with the added benefit of hiding one’s wealth within a private wallet address. Whether investors prefer Bitcoin to Gold depends on how serious they deem the current geopolitical crisis. Manav Modi, a Motilal Oswal Financial Services senior analyst, said that gold was back in focus amongst growing global uncertainty. Investors will also be considering Bitcoin, with the added benefit of a better-educated public, and the potential to secure their wealth during an economic crisis, or worse, a nuclear war. The Federal Reserve is set to meet on June 18 to discuss a possible rate cut. Futures markets have already predicted a 99% probability that the Fed will put rates on hold between 4.25%-4.5%. Bitcoin traders may pay attention to the Federal Reserve speech to ascertain whether there is a chance of a future rate cut. Inflation has continued to soften over time, which could indicate a rate cut later in the year. Futures markets continue to price in two rate cuts later in the year. Meanwhile, the Federal Reserve may not be in a rush to cut rates, holding on a bit longer to ensure that inflation is dampened considerably. Future prices of Bitcoin are challenging to predict, but the climate is right for another bull run in the near future. Although inflation has dampened recently, the inflation rate has risen by 0.1% from the 2.3% rate of April. Economists would like to see inflation trend the other way. Investors often invest in assets like Gold and Bitcoin when inflation goes up. Investors seek assets like Gold as a safe haven during an economic crisis. On Wednesday, the Bureau of Labor Statistics released an inflation report. The Gold price was $3,355 per Troy ounce before the report, then $3,382 afterward. Although the price change is small, it might indicate a positive sentiment for hedging Gold against inflation. Given the shaky situation lately, a slight shift in inflation could tip the scales and send Bitcoin into new all-time highs. Brent crude oil prices jumped by 5% last week, confirming concerns about further inflation and economic crises. The conflicts in the Middle East are not easing concerns that inflation may be lowered in the near future. US inflation figures have been cooler than expected, despite continuing to rise. The better-than-usual economic figures may have put a cap on the Bitcoin price before geopolitical concerns once again made cryptocurrencies a choice for hedging against economic crises. The People’s Bank of China has increased its gold bullion reserves for the seventh month. This could indicate positive institutional sentiment towards hedging assets such as Gold and Bitcoin. Alternatively, it may indicate a zero-sum game fermenting between Gold and Bitcoin, with China backing Gold and the US backing Bitcoin. US dollar weakness could also create strength for the price of Bitcoin and Gold. Volatility in the US dollar market could also spill over into the Gold and Bitcoin markets, creating further fluctuations and boosting the prices of cryptocurrencies. Gold price has support at $3,280 and resistance at $3,500 per Troy ounce. Bitcoin traders may monitor the Gold price to ascertain the sentiment of hedging investors. It would be difficult for a trader to short the Gold market during a major conflict in the Middle East. Gold prices often settle back down over time. However, the conflicts and economic tariffs seem to be escalating.
