After a drone strike, conducted by the U.S. military killed a top Iranian general, Bitcoin experienced its price most significant increase since two weeks. The price boost fueled speculation that geopolitical instability will raise demand for the cryptocurrency.

The price jumped 5 percent Friday from €6.250 to €6.600. The gain appeared to happen simultaneously with rising prices of oil and gold and brought Bitcoin back in positive levels in terms of year-to-date performance.

The correlation between Bitcoin & Gold

Mati Greenspan, founder of the cryptocurrency research firm Quantum Economics, stated that the drone attack drove up prices for gold. Gold is traditionally seen as an investment which holds it value during periods of instability. A significant amount of Bitcoin investors believe that the cryptocurrency shares many characteristics with gold and might be the new digital gold.

Higher oil prices can make investors nervous about economic growth while also potentially resulting in higher costs at the gas station. Furthermore, Iranians who have already shown to have an interest in Bitcoin and other cryptocurrencies might be stimulated to invest due to the uncertainty. This demand has been encouraged in recent years as the Middle Eastern economy faced a host of sanctions ordered by President Donald Trump's administration.

Iran’s interest in cryptocurrencies

In late December, Iranian President Rouhani said in a speech that Muslims would need their own cryptocurrency to

save themselves from the domination of the U.S. dollar and the American financial regime.

According to Greenspan, Iran has "long been seen as one of the hotbeds for bitcoin adoption" due to U.S. sanctions on money transfers stemming from the country. However, the news likely triggered purchase orders from investors who were already intending to buy bitcoin. Greenspan stated that "The Iranian market in and of itself is likely too small and slow to have caused this move single-handedly."

The return on Bitcoin over 2019 was an impressive 94%, making it the world's best-performing asset. For comparison, the total return charted by the Standard & Poor's 500 Index of large U.S. stocks was a third of Bitcoin's.