The outbreak of war in the Middle East has roiled global markets, but Bitcoin has been doing something unexpected: beating stocks.
Bitcoin has risen about 3.5% to $68,000 since the conflict between Iran, Israel and the United States began more than a week ago, according to CoinDesk. Over the same period, it has outperformed most major assets. Gold fell about 5%, silver fell 12%, the Nasdaq 100 fell about 1% and the S&P 500 fell about 1.5%.
The divergence has widened over the past 24 hours, with Bitcoin rising more than 2.5%, while U.S. stock futures remain in the red. WTI crude briefly surged to around $116 a barrel early Monday, having risen about 60% since the conflict began. However, comments from G7 leaders about the possible release of oil reserves helped cool the rally, with crude prices falling back to around $100 a barrel.
Meanwhile, the U.S. dollar strengthened, with the DXY index rising more than 1% to just above 99. U.S. Treasury yields have also climbed, with the U.S. 10-year Treasury yield rising to around 4.2% from just under 4% before the conflict.
Bitcoin’s outperformance comes after weeks of brutal sell-off, which saw the price nearly halve to around $60,000 from an all-time high above $126,000 in October. With sentiment already fragile when the conflict began, many expected the recession to deepen rather than reverse. Instead, the market did what it usually does best: catch the consensus off guard.
Track technology stocks
Despite Bitcoin’s relative strength, it still shows correlation with technology stocks. The widely followed software industry benchmark iShares Expanded Tech Software ETF (IGV) has gained about 7% since the conflict began, after rebounding from about $76 to close Friday near $88.
Derivatives market signals may point to stabilization. Open interest in coin-margined futures, which measures the total value of open interest settled in Bitcoin rather than U.S. dollars, has declined, suggesting leverage is being removed from the system. The periodic payment funding rate between perpetual futures long and short traders remains negative at around -3.5%, meaning short sellers are paying out longs, suggesting bearish positions remain crowded.
Meanwhile, the Coinbase premium is back. This measures the price difference between Bitcoin on Coinbase and offshore exchanges, and is often used as a proxy for U.S. institutional demand. Its re-emergence, along with cash ETF inflows, suggests institutional buyers may be returning to the market and finding demand at oversold levels.
