The relationship between them is complex and can generate different reactions in financial markets.
Initial impact and risk aversion
Generally, in times of geopolitical tension, such as conflicts in the Middle East, risk aversion is observed in global markets. This means that investors tend to seek out assets considered safer. Traditionally, the US dollar and US Treasury bonds are seen as "safe havens," which can lead to an appreciation of the dollar against other currencies.
In this scenario, Bitcoin, despite being considered by some as a "refuge" asset due to its decentralization and global nature, may initially suffer from risk aversion, just like other more volatile assets. There have been recent examples where attacks and escalations of tensions in the Middle East resulted in drops in Bitcoin prices in the hours or days following the events. This occurs because the crypto market, despite its own dynamics, is increasingly interconnected with traditional financial markets.
Recovery and Bitcoin's "safe haven"
However, in the medium and long term, the dynamics may change. Some analysts argue that Bitcoin can behave as a hedge against inflation and economic instability caused by prolonged conflicts. In a scenario of geopolitical uncertainty, where fiat currencies may be viewed with more risk, Bitcoin, with its limited supply and decentralized nature, may attract investors seeking an alternative.
Furthermore, initial volatility may give way to a recovery, especially if the perception of Bitcoin as a store of value in times of crisis strengthens. In some cases, after an initial decline, Bitcoin has shown the capacity for recovery and significant appreciation following geopolitical events.
Factors to consider:
* Dollar as a traditional safe haven: The dollar remains the primary global refuge asset in times of crisis, which can lead to its appreciation.
* Bitcoin volatility: Although Bitcoin has gained recognition as an investment alternative, it is still a volatile asset, and its immediate reaction to geopolitical events may be a decline, following the sentiment of risk aversion.
* Perception of "digital gold": In the long term, the narrative that Bitcoin is a "digital gold" or a hedge against inflation and monetary instability may lead to increased demand, driving up its price.
* Interconnection of markets: The cryptocurrency markets are increasingly connected to traditional financial markets, meaning that macroeconomic and geopolitical events tend to have an impact.
In summary, conflicts in the Middle East can lead to an initial appreciation of the dollar due to the search for safety, while Bitcoin may experience a temporary decline due to risk aversion. However, depending on the evolution of the conflict and the market's perception of Bitcoin as a store of value, it may recover and even appreciate in the medium/long term.