"Middle East all-out war intensifies…Bitcoin faces a 'digital gold' litmus test"

With the Middle East all-out war entering its third day following U.S. and Israeli airstrikes on Iran, an analysis says Bitcoin (BTC) is being put to the test as to whether it can be re-rated as “digital gold.”

According to BlockBeats, a cryptocurrency-focused outlet, the Strait of Hormuz has been closed and Red Sea routes are also being disrupted as the U.S. and Israel conduct large-scale military operations against Iran. Tanker operating speeds are reported to have effectively slowed.

The U.S. has yet to officially discuss whether to release oil from the Strategic Petroleum Reserve (SPR). The market interprets this as Washington’s judgment that oil prices remain within a manageable range. Major investment banks presented oil price outlooks under various scenarios. If the strait closure is prolonged, Brent crude could exceed $100 per barrel, but if tensions ease quickly, some of the geopolitical premium may be given back.

The macro backdrop is one in which inflation and geopolitical risks are simultaneously coming to the fore. The U.S. Producer Price Index (PPI) for January, released recently, rose 0.5% month on month, above market expectations, while the core year-on-year increase came in at 3.4%. This suggests upside price pressures remain firm, and is seen as a factor constraining the U.S. Federal Reserve’s (Fed) room to cut rates.

If oil prices rise further, it could again shock inflation expectations and the interest-rate path. Recently, funds have moved short term into gold and the dollar, and U.S. Treasury volatility has also increased. Risk assets are facing revaluation pressure.

In the digital-asset market, Bitcoin has been fluctuating around $66,000. The analysis says short positions are concentrated in the upper $67,800–$69,500 range, while buy orders are accumulated in the lower $64,000–$65,000 area. It describes the current phase as a liquidity tussle within a range.

Bitunix said, “If demand for safe-haven assets strengthens as the war expands, Bitcoin could break through the upper liquidation zone and extend the trend.” It adds that this could become a catalyst for the market to redefine Bitcoin as “digital gold.”

It also added, “If the price again tests the $64,000 support line, Bitcoin is likely to remain a high-volatility risk asset.”