Arthur Hayes, co-founder of BitMEX, has forecast a potential surge in Bitcoin prices as oil and energy costs increase due to escalating tensions in the Middle East.
Hayes believes that if the conflict between Iran and Israel worsens, leading to attacks on major oil fields, oil prices could skyrocket. This, in turn, would drive up the cost of other energy sources as nations look for alternatives.
How Rising Oil Prices Could Boost Bitcoin
In an October 16 blog post, Hayes explained that when energy prices rise, Bitcoin, which he describes as “stored energy in digital form,” would also see a price hike in fiat currency. He cited historical examples, such as the oil crises of the 1970s, when oil prices soared by 412% and gold followed closely with a 380% increase. Hayes suggests that Bitcoin could see a similar correlation with rising commodities prices.
Bitcoin’s Mining Profitability and Energy Prices
Hayes noted that while higher energy prices might affect Bitcoin mining profitability, the network would adjust. If the hashrate drops, mining difficulty would decrease, allowing new miners to profit even in a higher-cost energy environment.
The Impact of Middle East Tensions on Bitcoin and Commodities
With the possibility of Middle Eastern oil being removed from the global market, Hayes believes the Bitcoin blockchain would continue to function, and the price of Bitcoin would maintain or increase relative to energy prices. As of October 17, oil prices dropped by around 3.7%, but Bitcoin gained over 8% during the week, reaching above $68,000.
Safe-Haven Assets on the Rise
In addition to Bitcoin, gold prices hit an all-time high, reaching $2,711 per ounce. Investors have been flocking to safe-haven assets like gold and Bitcoin due to uncertainties around the upcoming U.S. election and escalating geopolitical tensions. Israel recently announced plans to retaliate against Iran after missile strikes, further fueling the uncertainty.