Bitwise flags bullish Bitcoin after risk spike

Bitcoin is facing renewed short-term pressure from escalating geopolitical tensions, yet Bitwise Europe says history suggests extreme risk spikes often precede strong medium-term gains for the asset.

In its March 2 Weekly Crypto Market Compass titled “Bitcoin Under Pressure as Geopolitical Risks Rise – Why History Points to a Bullish Setup,” Bitwise said major Middle East conflict has weighed on prices but historically created favourable forward return profiles.

“Although bitcoin tends to trade lower in the short-term, geopolitical risks usually tend to mean-revert and decline to lower levels, which tends to provide a renewed tailwind over the medium- to long term,”

The report stated.

Bitwise noted that when the Geopolitical Risk Index rises into the top 20% of historical readings, bitcoin has often delivered above-average returns in the following month despite near-term drawdowns.

“This historical pattern has shown that the risk-reward has been positively skewed to the upside after major geopolitical risk events, although downside risks may remain in the short-term,”