The price of the flagship cryptocurrency Bitcoin ($BTC) has fallen by more than 13% over the past week to now trade at around the $62,000 mark and despite the dip, some traders believe the cryptocurrency could soon enter a “doomsday rally,” fueled by growing tensions in the Middle East.

Bitcoin was created in the aftermath of the 2008 financial crisis and has long been seen as a potential hedge against geopolitical events, even though it has been treated as a risk asset by investors over the last few years, with its correlation to the Nasdaq growing significantly at some points, and lowering during the latest bull run.

According to the Chief Investment officer at Tyr Capital, Edouard Hindi, Bitcoin is still a “viable doomsday asset” as “its correlation to gold recently increased,” CoinDesk reports. Hindi added that spot Bitcoin ETFs are “spearheading this Doomsday rally” and revealed he sees the cryptocurrency’s price hit $120,000 “in the coming months.”

The prediction is based on growing geopolitical tensions after Iran attacked Israel over the weekend with drones and missiles, the first time in history the country attack Israel directly, in response to an attack on one of its own embassies.

Other price predictions have revealed more bullish, with Robert Kiyosaki, author of the best-selling personal finance book “Rich Dad Poor Dad,” recently reiterating his optimistic outlook on Bitcoin, predicting a price surge to $2.3 million per BTC.

These predictions are coming at a time in which demand for the flagship cryptocurrency is “growing at an unprecedented pace,” at a time in which the supply of Bitcoin held on cryptocurrency exchanges has dwindled to record lows, suggesting a potential supply shock that could drive prices higher could soon occur.

According to Julio Moreno, Head of Research at cryptocurrency analytics firm CryptoQuant, demand for the flagship cryptocurrency “has become more important than supply” and, according to the firm’s data, demand for BTC from permanent holders has for the first time ever outpaced issuance.

Data from CryptoQuant shows that known exchange addresses now hold roughly 1.94 million BTC, a figure that represents a mere 9.8% of Bitcoin’s total circulating supply of around 19.67 million coins.

These exchange reserves have been steadily declining from a peak of 2.85 million BTC seen in July 2021, with the diminishing supply on exchanges suggesting that investors are increasingly taking a long-term holding strategy rather than being actively trading.

It’s worth pointing out that a lower supply on exchanges could lead to a potential supply shock if demand is to suddenly surge. A supply shock occurs when the readily available supply of an asset on exchanges abruptly drops while demand increases.

Featured image via Unsplash.