Bitcoin fell to US$99,000 on Sunday (22/06) after the US attacked Iran. However, that was not much, as Bitcoin even touched US$75,000 last April after US President Donald Trump announced tariffs on several countries.
So, why are investors more afraid of tariff wars than actual wars?
Bitcoin plummeted when tariffs were to be implemented because investors feared that tariffs would raise inflation and prompt the Fed to increase interest rates. If interest rates rise, investors would be more inclined to buy US dollars, which causes the price of Bitcoin to drop.
Even JP Morgan stated that tariffs increased the likelihood of a recession to 60%, up from 40% previously. This has caused many people and investors to face economic uncertainty.
Nevertheless, Bitcoin rose again by 13.92% to US$84,000 in a week even though both the US and China raised their tariffs.
The price fluctuations of Bitcoin continue to be tested with the outbreak of war in the Middle East that began with the attack on the Israeli stock exchange by Iran in Tel Aviv on Thursday (19/06). Bitcoin, which had briefly dropped, remained in positive territory at US$105,023 on the same day.
In addition, amid the Middle East and US war, there are more retail activities compared to institutional ones. In fact, according to data from Alphractal, the trend of increasing short positions from retail investors has significantly risen in the market due to geopolitical tensions.
Although it briefly dropped sharply to US$99,000 after the US bombing of Iran's nuclear site, Bitcoin has shown resilience to recover quickly. Historically, from the US-Iran tensions in 2020, the Russian invasion of Ukraine in 2022, to the Iran-Israel conflict this year, Bitcoin has shown remarkable upward movement or price stability.
Finally, in research by Santiment, the current investor sentiment has risen rapidly despite many geopolitical tensions, as it is in a slightly bullish trend, with 14,004 Bitcoins or US$1.4 billion purchased by investors.