Trump’s Iran deadline and the issue of the $75,000 bitcoin price rally
Main Receptors:
President Trump's deadline for Iran on Tuesday will create a critical moment as Bitcoin continues to pull out of gold.
While the ceasefire could boost equities, Bitcoin's path to $75,000 depends on its role as a hedge against financial uncertainty.
BTC May Benefit From US-Iran Ceasefire (No).
There is a strong possibility that US President Donald Trump's deadline for Iran on Tuesday could be the catalyst for Bitcoin's (BTC) rally above $75,000.
If the deal fails to materialize, perceptions of Bitcoin's risk may intensify due to its unique decentralized nature. On the contrary, a positive outcome in the negotiations can move risk assets, including Bitcoin.
President Trump issued an ultimatum to Iran on Sunday, warning that the country will live in hell if the Strait of Hormuz is not reopened by 8:00 a.m. Tuesday. However, CNBC reports that Trump is “vacillating” between productive talks and escalating military action.
Senior Iranian officials said the coast would remain closed until Iran receives compensation for its damages.
These mixed signals failed to convince market participants on Monday as US stock markets traded mostly flat. In contrast, bitcoin jumped above $69,000 for the first time in 10 days — a trend that was more pronounced as gold neared $4,650, down 17 percent from its all-time high of $5,600.
Bitcoin is slowly catching up to gold
Traders are worried that central banks will be forced to withdraw their gold reserves. The Central Bank of Turkey For the week ending March 20, sales of 50 tonnes of gold showed the biggest drop in more than seven years.
According to Reuters, Turkey has sold $26 billion in foreign currency since the outbreak of war between the US and Israel and Iran in late February to stabilize the market. At the same time, Russian gold reserves, measured in tonnes, fell to their lowest level in four years.
A ceasefire in Iran, however temporary, will certainly strengthen risk markets, although its implications for Bitcoin are less certain.
Traditional corporations remain highly dependent on energy costs and global logistics. Therefore, any reduction in geopolitical risk is immediately reflected in equity prices.
However, the agreement between the US and Iran may have a direct impact on Bitcoin, because the decision will strengthen the demand for US Treasuries.
The yield on the U.S. 5-year Treasury note rose to 4% from 3.55% at the end of February, indicating that investors are demanding higher returns for holding those bonds. While part of this selling pressure stems from fears of inflation driven by higher oil prices, there is additional pressure on the US fiscal debt due to increased military spending.
Eventually, a ceasefire and renewed reliance on the US Treasury will reduce the need for alternative hedges and independent financial systems like Bitcoin.
But, even if the Hormuz River reopens, Mohit Mirpuri, equity fund manager at SGMC Capital, warned: “The damage to confidence and supply chains is already done – things are not just going back to normal.”
Related: Iran War Bets Turn Prediction Markets Into Instant Macro Radar – Signum
It seems far-fetched to predict that the price of Bitcoin will rise 8% on Tuesday based on a possible resolution of the US and Israel-Iran war. Investors are slowly getting used to President Trump's back-and-forth behavior, especially when the negotiations involve unreliable third parties.
Traders are less likely to give the benefit of the doubt in this instance, so a sustained rate of crash may take longer to materialize for risk markets. However, the case for a $75,000 Bitcoin rally will be possible despite a positive outcome by Tuesday.
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