The price of bitcoin has risen sharply to its highest level since November 2019, reaching above $8,500 (£6,500) for the first time this year.
The latest increase has reignited the debate over whether bitcoin has become a safe-haven asset, with some market analysts claiming the cryptocurrency is a form of digital gold that investors turn to in times of economic and political turmoil.
Recent bitcoin gains coincided with escalating tensions between the US and Iran, as well as developments in the ongoing trade war between the US and China, leading some to suggest there is a correlation between geopolitical events and the cryptocurrency's value.
"Investment in bitcoin as a potential safe haven investment surged following the US assassination of Iranian general, Qasem Soleimani, earlier this month," Iqbal Gandham, UK managing director of the online trading platform eToro, told The Independent.
"There was a 46 per cent increase globally in the amount of opened bitcoin positions on eToro compared to the average in the previous three months. This shows that bitcoin, and cryptocurrencies in general, are increasingly seen by some investors as a hedge in times of geopolitical crises."
The price of bitcoin is notoriously volatile, making it difficult to attribute specific events or reasons to market movements.
But the volatility, combined with a lack of mainstream applications, means bitcoin is consistently referred to as digital gold because it is more commonly used as a store of value than a currency.
"Bitcoin is digital gold," explained Brooke Stoddard, an investor and former Goldman Sachs associate. "Bitcoin and gold are borderless, decentralised, and verifiable. Both are worth something, they store value. But bitcoin is easier to transfer, divide, and harder to counterfeit."
Bitcoin's price is therefore often compared with that of gold, though research suggests the two are not linked.
Iran missile attack did *NOT* cause Bitcoin's rise last night. $BTC was already in a strong uptrend before the missiles hit. Gold rose and stocks fell initially, but traders soon relaxed, so stocks recovered and gold fell. Bitcoin stayed high because its rise is not Iran-related. pic.twitter.com/LzImhz6UGs
— Glen Goodman (@glengoodman)
Bitcoin has risen by more than 20 per cent since the start of 2020, however it fell by nearly a third between October and November last year during a time of similar uncertainty when the Trump administration was ramping up sanctions on China and the UK's future in the UK was unclear.
Cryptocurrency trader and author Glen Goodman rejected any relation between bitcoin's price and the US assassination of Soleimani, or the subsequent Iranian missile strikes on US military bases in Iraq.
"Bitcoin was already in a strong uptrend before the missiles hit," Mr Goodman wrote on Twitter following the attacks.
"Gold rose and stocks fell initially, but traders soon relaxed, so stocks recovered and gold fell. Bitcoin stayed high because its rise is not Iran-related."