The geopolitical world is in turmoil this morning after the United States launched an airstrike at a military base near to Baghdad International Airport, reportedly killing the head of the Iranian Revolutionary Guards’ elite Quds Force, General Qasem Soleimani.
The markets responded as expected to the news, with gold, oil and Bitcoin – all hedges to the traditional financial system – surging significantly.
Bitcoin responded dramatically, rallying by 7.5% from the $6,850 level of support to test the $7,400 level of resistance.
Gold, meanwhile, had precious metal traders scrambling to put on long positions as it attempted to surpass its seven-year high $1,556 per ounce.
Global oil prices also witnessed price action to the upside, with the global average surging by more than 3% as tensions between the US and Iran continue to escalate.
The US Department of Defence claimed that it killed Soleimani because he “was actively developing plans to attack American diplomats and service members in Iraq and throughout the region”.
It also pointed the finger of blame towards Soleimani for the approving the attacks on the US Embassy in Baghdad earlier this week.
An adviser to Iranian President Hassan Rouhani has claimed that the US should now “be ready to face the consequences”.
— Twitter Moments (@TwitterMoments) January 2, 2020
“Trump through his gamble has dragged the US into the most dangerous situation in the region,” said Hessameddin Ashena.
“Whoever put his foot beyond the red line should be ready to face its consequences.”
It remains to be seen how the conflict may escalate over the coming days and weeks, but the prospect of war, whether moral or not, is undoubtedly bullish for markets like cryptocurrency as the Dollar begins to show signs of weakness.
Bitcoin was spawned out of a financial crisis 11 years ago, and while it’s certainly endured its fair share of trials and tribulations, it has not existed during a period of major political instability.
If global economies start to weaken at the prospect of warfare, Bitcoin could well provide a suitable hedge for millions across the world, thus driving mass adoption.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.