Why Bitcoin Was Bumping Higher on Monday
Key Points
Investors tend to shy away from such assets in times of strife or uncertainty.
Compounding the good geopolitical news, the coin's top institutional holder purchased $100 million worth of it last week.
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A sharp, sudden decrease in geopolitical tension was helping Bitcoin (CRYPTO: BTC) rise in price over the weekend. From Friday at 4 p.m. ET to late Monday afternoon, the bellwether cryptocurrency was up by more than 4%.
The power of potential peace
Since cryptocurrencies are on the far side of the investment risk scale, they tend to be sold during times of uncertainty. This was very much evident throughout the Iran war, when crypto rallies were few and far between.
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On the flip side, when a tough situation dramatically improves (or at least appears to), many investors rediscover their appetite for risk and return to such assets. The new framework agreement to halt the war, announced by the Trump administration and confirmed by Iran, is a very welcome development that, hopefully, will bring it to an end.
Another factor pushing Bitcoin higher is that the coin's top institutional investor has once again loaded up on it. Strategy, whose executive chairman is high-profile Bitcoin enthusiast Michael Saylor, purchased 1,587 Bitcoin for $100 million last week, according to a regulatory filing the company made early Monday.
While that's not huge given Strategy's holdings -- after the buy, it held 846,842 Bitcoin -- any nine-figure purchase adds considerably to positive investor sentiment on the digital currency.
Hold fire
Indisputably, a potential end to the war is good news not only for humanity but for the world's economies, companies, and investments. I'd advise caution here, though, as key terms of the deal remain murky, and it's not entirely clear that all of Iran's leadership is on board. Given that, my instinct would be to hold off on risky plays at the moment, including Bitcoin.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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