Bitcoin is the safe haven par excellence in the face of the redefinition of the balance of power.
Crises and market reactions
The events in Ukraine as well as in the Middle East are very worrying. However, the stock markets are prance on both sides of the Atlantic. Geopolitical tensions are not shaking up the markets as much as before.
For example, oil soared by 300% following the 1973 OPEC embargo against nations that supported Israel. The US S&P 500 stock index collapsed by 50%.
Two decades later (1990), the price of a barrel rose 100% and the S&P 500 fell 20% in reaction to the first Gulf War.
The price of oil only increased by 20% for the second Gulf War (2003), without a clear reaction from the S&P 500.
More recently, the invasion of Ukraine did result in a 300% explosion in gas prices, but the aberration was short-lived. The United States actually had surplus shale gas to sell us… The 18% drop in the S&P 500 was quickly erased.
The latest unrest in the Middle East has also had a limited effect on oil prices. The S&P index is up 20% since October 7.
In other words, price fluctuations have become less significant, as if nothing was really serious. That being said, we should not believe that volatility has disappeared. A real war in the Middle East with the participation of the United States would quickly revive it.
The calm before the storm ?
We will see how Israel reacts to Iranian retaliation. Tehran has already warned that the response will be instantaneous and massive if Israel responds. In the absence of a diplomatic solution, the two countries could officially go to war.
It is not impossible that things will settle down, but let us not forget the statements of former Speaker of the House of Representatives Kevin McCarthy in the wake of the Palestinian rebellion of October 7:
“We must confront Iran. Hamas is a puppet of Iran. […] We must confront this new axis of power. This is an axis of evil made up of Iran, Russia and China. »
It should in fact be recalled for more context that the Persians refuse to sell their oil in dollars. And that the second Iraq war was the American reaction to Saddam Hussein's decision to sell his oil in euros rather than dollars.
Let's not lose sight of the fact that geopolitics is the art of controlling energy resources, or the currency in which they are sold (which amounts to the same thing).
U.S. foreign policy is focused on preserving “exorbitant privilege.” The wars in Ukraine as well as in the Middle East are part of the strategy implemented to defend the petrodollar which the BRICS no longer accept.
All with the blessing of a Europe which risks great in the event of an escalation of the conflict and the closure of the Strait of Hormuz. The reason being that more than half of the world's oil exports pass through this 60 km bottleneck.
The ECB is aware of this. Christine Lagarde made it clear last week that the situation in the Middle East could cause inflation to rise again.
The Americans have little to fear since they produce their own Shale oil. What luck…
War and debt
A blockade of the Strait of Hormuz would cause a major inflationary shock. Oil powers 95% of global transportation. Any increase in the price of the joule immediately results in generalized inflation, and especially in food prices:
The growing antagonism between the United States and China is another source of anxiety. Particularly regarding the future of Taiwan. Its national flagship (TSMC) is the world's leading producer of the most advanced electronic chips (3 nm).
An embargo on Taiwan would cause a monster inflation of electronic products. If semiconductors truly are the new oil, financial markets would do well to closely monitor events in the South China Sea.
Supply chain aside, war itself is an inflationary money pit. Israeli public debt has soared by 9% in 2023. The amounts borrowed are almost three times higher than normal.
Knowing that the country benefits from tens of billions paid by the United States which spends lavishly to maintain the ambient chaos. This chart shows that Israel has already received more than 300 billion dollars free of charge since its creation. 300 billion is as much as its public debt!
All this to say that if the standoff between the West, Russia, Iran and China degenerates, it is certain that the printing press will turn even more vigorously.
To finance what exactly? Shells, drones, tanks, etc. The complete opposite of what is needed to increase productivity, the keystone of prosperity.
War is inherently inflationary. Bank of America also expects inflation to rise to 5% by the presidential election in September:
Bitcoin, the “Safe Haven”
Bitcoin has appreciated 125% since October 7. It is the king currency in the event of a serious deviation in international relations.
It would become the only truly global payments network if the West were to disconnect new countries from the SWIFT network.
Its absolutely finite money supply also makes it a serious contender for the title of international reserve currency. Especially if the United States made the mistake, after Russia, of freezing the foreign exchange reserves of other countries.
It is hard to imagine how bitcoin could not do well if the great powers lose their cool. Gold is currently in the spotlight, at an all-time high, but this is the last stand.
Bitcoin will become “twice as rare” as gold after the halving. While the equivalent of 1/60 of the world's gold stock will be created each year, it will be only 1/120 for bitcoin. And then 1/240 in four years, etc…
Not to mention the fact that you can escape a country at war by simply memorizing 12 words. It's harder to fly with gold bars.
So many advantages that make bitcoin essential, especially if the war were to spread to new regions of the world, in a crazy escalation.
It’s a scenario we don’t hope for. Bitcoin does not need a war to reach the million dollar mark. The inflation promised by peak oil will take care of it…
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