Early Tuesday morning (GMT), US President Donald Trump left the G7 meeting in Canada early. He later wrote that Tehran should be evacuated. The magnitude of his remarks sparked a reaction across markets, including the price of Bitcoin, which plummeted from nearly $109,000.
Trump's statements are causing consternation as they clearly hint at a possible nuclear attack on Iran. The conflict between Iran and Israel has been going on for just over four days, and the level of mutual destruction negates any possibility of a winner.
Trump's words can be interpreted in two ways: the first is that Israel is indeed preparing a nuclear attack against Iran. The second interpretation is more political.
Donald Trump, in his characteristic style, is likely seeking to force Iran to reach an agreement under this threat. A likely third element is that the level of destruction wrought by Iran in Israel has exceeded expectations, and the US is considering intervening on Israel's behalf.
As you can see, events are now unfolding, and no scenario should be ruled out. Hence, the markets are showing considerable volatility. Although the Bitcoin price plummeted, it at least managed to hold on to $107,000.
Bitcoin price trend over the past 24 hours. Source: CoinMarketCap
What can we expect from the Bitcoin price in these scenarios?
Predicting Bitcoin's reaction can be tricky due to the varying scale of these scenarios. Of course, a nuclear attack by Israel on Iran would be a black swan event for all financial markets.
The reasons for this are more than obvious, considering that Tehran is a city of 10 million people. The consequences of this would be enormously negative, obviously for Iran, but also for Israel and the US. Any argument justifying such a measure would give the green light to countries like Russia or China to use nuclear weapons in their own conflicts.
This scenario would be uncharted territory, and it's unknown how the BTC would react to a new global reality based on nuclear barbarism. Leaving aside this nightmare scenario, there's the possible second argument: Trump's pressure to reach an agreement.
So far, Israel has partially achieved its goal of eliminating the Iranian regime's military and scientific establishment. For its part, Iran is causing untold damage to the Israeli economy. This leaves Israel's defensive capabilities of American weapons in a bad position, which is not good for manufacturing companies.
The fact that Iron Dome will be rendered obsolete by low-cost Iranian drones is not the best image for selling weapons.
The latter gives an idea of Trump's urgency to stop the conflict. The big problem for Trump is that neither Iran nor Israel will want to be the first to cancel their attacks. The first to stop missile delivery would project the image of a loser. This latter scenario is unlikely to threaten the price of Bitcoin.