Key takeaways:
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Bitcoin returns after major downside catalysts have exceeded 64.6% since 2010, suggesting that the recent escalation of tensions in the Middle East could be a BTC purchasing opportunity.
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Despite trading near all-time highs, Bitcoin’s Puell Multiple remains in the discount zone, indicating institutional accumulation and undervalued market conditions.
Bitcoin (BTC) price fell to $102,650 on Binance on Friday, following Israel’s airstrikes on Iran. As the tensions culminated, oil prices rose by 5%, and historical data suggests the BTC dip could be a buying opportunity. Amid rising global tensions, Bitcoin’s past performance during geopolitical crises offers a compelling investment case.
Head of research at Bitwise Europe, André Dragosch, highlighted this potential in an X post, citing data from across the top 20 geopolitical risk events since 2010. The analyst said that Bitcoin has averaged a 64.6% price increase within 50 days, with a median gain of 17.3%.
The chart shows Bitcoin’s geopolitical event performance on a logarithmic factor scale. The mean performance (green line) remains relatively stable around 100 before a risk event, but it surges after the event, peaking around 30-40 days later within the min-to-max range (shaded area). This pattern suggests that the current dip could be a temporary market reaction, with historical precedent pointing to substantial gains in the weeks ahead.
Blockstream CEO Adam Back reinforced this trend, countering gold advocate Peter Schiff’s skepticism with data from 10 major events since 2020. Back’s chart mirrors Bitwise’s, showing Bitcoin’s 20% gain after the U.S.-Iran escalation in January 2020, often outpacing gold and the S&P 500.
An October 2020 study also complements these findings. Using Granger causality tests on Bitcoin price and geopolitical risk indexes from 2010-2019, the study identified bidirectional influences, indicating that Bitcoin not only reacts to geopolitical events but also serves as a stabilizing asset during global uncertainty.
Related: Bitcoin mirrors 80% rally setup that preceded 2024 Israel-Iran conflict
Puell Multiple supports the Bitcoin investment thesis
Data from CryptoQuant also suggests that Bitcoin is in buy territory. The Puell Multiple, which tracks miners’ daily revenue against the annual average, lingers near the discount zone below 1.40, despite Bitcoin’s recent peak above $108,000.
This rare divergence, intensified by the April 2024 halving’s reduced block rewards, signals undervaluation and suggests the market is driven by institutional demand or tightening supply, not miner selling pressure.
Historically, a Puell Multiple below 1.0 marks accumulation phases, indicating Bitcoin’s current rally may be far from its euphoric peak. The post added,
“Therefore, the current scenario represents a potential window of opportunity. The combination of a historically high price and still conservative fundamentals reinforces that the upward cycle may only be half over.”
Additionally, Glassnode data shows Bitcoin is currently trading between key short-term cost basis (CB) with its 1-week CB at $106,200, 1-month at $105,200, 3-month at $98,300 and 6-month at $97,000. The BTC cost basis represents the average price at which investors acquired their Bitcoin over a specific period. With most holders in profit, the risk of panic selling remains low, but it could change over the next few weeks.
These metrics— a discounted Puell Multiple and resilient cost basis—highlight a robust foundation for recovery, suggesting that the current dip could be a prime opportunity for investors eyeing Bitcoin’s next upward move.
Related: Bitcoin price Bollinger Bands ‘failure’ risks end of uptrend at $112K
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
