Uptober Stalls as Iran-Israel Clash Sends Investors to Gold

• Iran strikes Israel, heightening Middle East tensions.
• Investors flee Bitcoin for gold in response.
• Bitcoin‘s hedge credentials are questioned once again.

Bitcoin defied expectations of a September slump , ending the month with a solid 8% gain and setting the stage for what many anticipated would be a strong “Uptober.” Historically, October has favored Bitcoin’s price, fueling optimism for a continued rally.

However, escalating tensions in the Middle East, sparked by an Iranian missile and drone attack on Israel , quickly shifted market sentiment. Bitcoin fell to a two-week low as investors sought refuge in gold, undermining the narrative that BTC is a safe-haven asset during geopolitical crises.

Uptober Expectations Dashed

Although many Bitcoiners expected October to continue September’s momentum, stirring Middle East tensions have postponed “Uptober.” On October 1, Bitcoin dropped to an intraday low of $60,300, while gold surged to $2,673 per ounce as markets reacted to the missile attack.

Jeroen Blokland, founder of Blokland Smart Multi-Asset Fund, highlighted this divergence by charting the sharp contrast in Bitcoin and gold’s price movements following the outbreak of hostilities. His analysis suggested that investors shifted from BTC to gold in response to the crisis.

While Bitcoin is frequently promoted as an uncorrelated asset, the Coin Bureau X account questioned whether this narrative holds up in light of the recent sell-off triggered by the latest flaring of Iran-Israel tensions.

Bitcoin Believers Unfazed

While Monday’s market behavior suggested that Bitcoin isn’t a reliable geopolitical hedge, Bitcoiners were quick to defend it. JAN3 founder Samson Mow criticized the decision to sell BTC for “paper gold,” arguing that Bitcoin’s portability is a better bet in the event of war.

Influencer “moneyordebt ∞/21M” reinforced this sentiment, stating, “Gold is a short-term risk hedge; Bitcoin is the long-term risk hedge.” This claim was supported by a BTC-gold ratio chart, showing that over time, fewer Bitcoin is needed to buy an ounce of gold.

Tempering Uptober expectations, economist Alex Krüger pointed out that 2024 is a US election year, historically a period of volatility. He noted that this uncertainty has often led to turbulent Octobers for the S&P 500, which could spill over into Bitcoin.

However, despite the correlation some analysts draw between Bitcoin and stocks, Bitcoin surged 27.7% in October 2020, the last US election year, showing that political uncertainty doesn’t always dampen BTC’s price performance.

On the Flipside

• Bitcoin’s ease of liquidation may factor in its reaction to geopolitical events.
• Gold is down 0.8% since the local top.
• Hedging against currency debasement is a separate issue from hedging against war.

Why This Matters

While a single geopolitical event may not define Bitcoin’s future, the market’s flight to gold shows that the leading crypto’s journey to safe-haven status remains an uphill battle.

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