Why Bitcoin Declines to React to Middle East Tensions, Says Raoul Pal
Bitcoin (BTC) continues to show stability despite increasing tensions in the Middle East involving Israel and Iran. Recent military strikes on Iranian energy assets triggered concerns across financial markets, but Bitcoin remained relatively unaffected, indicating a limited response to geopolitical news.
Raoul Pal, a macro investor, attributes Bitcoin’s stability to global liquidity trends. He claims that Bitcoin closely follows the global M2 money supply rather than political or military events. According to his analysis, 89% of Bitcoin’s price movements align with liquidity patterns held by institutions and banks.
This explains why Bitcoin exhibited minimal reaction even after reports of fires at Iran’s South Pars gas field. The Kobeissi Letter confirmed the strike and warned of a potential spike in oil prices. However, Bitcoin moved only 0.02%, reflecting its correlation with broader financial factors.
Liquidity Drives Bitcoin, Says Raoul Pal
Pal’s chart demonstrates that BTC responds more to global liquidity changes than to news or short-term market shocks. The relationship between M2 supply and Bitcoin remains robust over the past three years, enduring through global conflicts, interest rate adjustments, and election periods.
The Kobeissi Letter also highlighted market risks following the Israel-Iran clash, but Bitcoin maintained its stability. In contrast, oil futures surged over 7%, indicating investor concerns in energy markets. Despite warnings of supply disruptions by monetary firm Alva, this had minimal impact on Bitcoin pricing.
Pal emphasizes that liquidity growth is the primary driver of Bitcoin gains, not daily news developments. He believes that only a shift in global money supply could alter Bitcoin’s long-term trajectory. Therefore, Bitcoin’s resilience supports the notion that macroeconomic forces outweigh news-driven volatility.
Central Banks’ Influence BTC Price Direction
Pal’s analysis offers investors a straightforward framework to comprehend Bitcoin’s price trends. If global liquidity continues to expand, Bitcoin may witness higher prices in the long run. While short-term fluctuations may occur, the overall trend hinges on monetary policies and liquidity levels.
As tensions escalate in the Middle East, Bitcoin’s unwavering position underscores Pal’s thesis. This further reinforces the idea that central banks and institutions shape Bitcoin’s overall trajectory. Investors are encouraged to focus less on headlines and more on liquidity conditions impacting BTC markets.
The post Why Bitcoin Declines to React to Middle East Tensions, Says Raoul Pal appeared first on CoinCentral.
