Bitcoin Typically Declines During Geopolitical Tensions
Bitcoin has traditionally struggled to hold ground during times of geopolitical stress, particularly when global oil prices experience sudden surges.
Investors tend to flock to safer assets like U.S. Treasury bills and cash, leaving riskier options like Bitcoin vulnerable to sharp pullbacks.
However, market data shows that these oil-driven corrections in Bitcoin are often short-lived and may present strategic buying opportunities.
Short-Term Pain Often Followed by Gains
Recent price action has reinforced this pattern.
On Friday, West Texas Intermediate (WTI) crude climbed 19% to $77 per barrel between Wednesday and the end of the week.
During the same period, Bitcoin dropped from $110,200 to $102,800.
The quick divergence confirmed Bitcoin’s classification as a risk-on asset that typically underperforms in volatile global environments.
Yet, a longer view suggests the losses are often temporary.
Bitcoin has historically rebounded strongly within a week of oil spikes.
Over the past year, three separate oil rallies have corresponded with steep Bitcoin selloffs, each followed by recoveries ranging between 16% and 24% within eight days.
Key Examples Show Consistent Recovery
One of the most notable instances occurred on January 15, 2025.
Oil jumped from $72.50 to $80.50 within six days following U.S. sanctions on Russia’s oil sector and declining U.S. crude stockpiles.
Bitcoin had dropped to $89,300 on January 13 but surged 22% to $109,300 by January 20.
A similar dynamic played out on October 8, 2024, after terrorist attacks in the Middle East led to a rise in oil prices from $68 to $77.50.
Bitcoin initially dipped to $58,900 before recovering 16% to $68,960 over the next eight days.
In August 2024, unrest in Libya caused a shutdown of key oil fields, pushing prices from $74 to $80.
Bitcoin dropped to $56,150 by August 15 but rallied back to $65,000 by August 23, again marking a 16% recovery.
Long-Term Correlation Remains Unclear
Despite these examples, the broader relationship between oil and Bitcoin remains inconsistent.
Correlation data over 10-day periods shows fluctuations, with no persistent trend linking the two assets.
This makes Bitcoin less of a direct hedge and more of a high-volatility opportunity for traders looking to exploit short-term dislocations.
Still, these historical movements offer clues for positioning.
With oil currently at five-month highs, Bitcoin’s present price near $102,800 may offer a favorable entry point, particularly for those targeting gains of 16% or more.
If previous patterns hold, Bitcoin could rise toward $119,200 by June 21.
Conclusion
While Bitcoin remains vulnerable in the early days of geopolitical upheaval, past performance indicates that sharp selloffs often precede strong rebounds.
For traders monitoring the interplay between oil shocks and crypto prices, the current environment may represent another window of opportunity.