- Bitcoin yesterday traded close to 24,000 USD on the cryptocurrency exchange LocalBitcoins in Iran.
- Analysts have identified the political tension between the United States and Iran as the reason.
Bitcoin (BTC) experienced a sudden surge yesterday 3 January following a dip to $6,850. This was quite surprising as many analysts had predicted the top cryptocurrency was due to go even lower. Several explanations have been given for the sudden rise in price, but the one that seems to hold water is the tension between the U.S and Iran following an airstrike in the country’s capital, Baghdad.
According to data from Peer-to-Peer trading platform LocalBitcoins, traders in Iran are faced with a price of $24,000 per BTC, an equivalent of 1 billion Iranian Rials as of yesterday. This may also be due to the internet restriction in the country which has reduced P2P trading on the platform to a very low level in the last few months as protests over rising fuel prices.
Crisis nations using BTC as lifeboat
There are existing U.S sanctions against Iran which has placed restrictions on their financial freedom especially in terms of international trade. With the recent airstrike, the tension in the region has increased and Iranians may be in fear of a possible crash of the Rial which is already in bad shape. This fear may be what has driven BTC price up as Messari Founder Ryan Selkis says Iranians may be using it to escape the possible financial menace.
Bitcoin is trading at nearly $24,000 in the USD equivalent of Iranian Rials on LocalBitcoins today. It’s unlikely those purchases are paying for the Iranian military’s response. Instead, it might be innocent (and desperate) Iranians looking for a way out of the coming chaos.
This is already becoming a pattern as BTC demand in countries with similar situations has been on the rise, and this eventually leads to price rise as well. These countries which typically have weak economies with weak currencies such as are turning to Bitcoin as the way out of such conditions as uncertainty continues to loom.
In fact, Bitcoin P2P trading reached an all-time high on LocalBitcoins in Argentina and Venezuela at the end of December 2019. For instance in Venezuela, the week starting from 21 December saw $24 million worth of Bitcoin traded on the platform. This was an increase of 14.5% from the previous week and such increase has been sustained. Argentina also witnessed a rise from $300,000 to $500,000 around the same time.
Sanctions can be circumvented with cryptocurrencies
Iran is one of the countries that have placed an open ban on any crypto-related activities. However, its citizens consider cryptocurrency as the way out of its worsening economy. The Iranian government itself is proposing the launch of its own digital currency to boycott U.S sanctions and break free from its economic controls.
With this in mind, it is unlikely that cryptocurrencies will be leaving anytime soon as demand for BTC may keep rising as more political and economic crises loom. This is also likely to affect the global price of the asset as is seen already within the last 24 hours.
Bitcoin is trading at USD 7,375.81 at the time of writing and has seen a slight increase (+ 1.84%) in the last 24 hours.