Bitcoin remains in the doldrums while investors go risk-off

Risk aversion dominated the market in the second part of the week following Iran’s attack on Qatar’s massive gas field. Bitcoin gave up its gains from the first part of the week to close virtually unchanged. Since the start of the Iran-US war, Bitcoin is still showing gains, but it is becoming clear that if more and more investors decide to sit this one out on the sidelines, everything will be dragged down (except oil).

Energy bills

Geopolitical developments are currently weighing on market sentiment. A prolonged conflict with Iran could heighten the risk-averse mood; as the oil price remains above $100, this likely means a longer period of higher energy costs, which will be passed on through the global economy. While various Asian countries are already rationing energy, the West will likely face increased inflation again if the White House does not end the war soon;

Higher energy bills, in particular, will affect virtually all families.

Inflation concerns will resurface, leading to a risk-off mode as investors still remember very well the consequences of this happening in 2022 (when Russia invaded Ukraine). By the end of 2022, inflation levels in most Western economies had risen to 8 and even 10 percent, resulting in a massive increase in consumer prices for most basic goods.

2022 was also the year of the last bear market for Bitcoin, causing those concerns to resurface as well.