Bitcoin’s resilience during the latest global macroeconomic crisis is starting to turn heads on trading desks.
The largest cryptocurrency climbed to just under $71,000, up about 7% from Sunday evening’s low, even as geopolitical tensions intensified over the Iranian conflict and markets grappled with risks ranging from oil supply disruptions to strains in private credit markets.
This relative strength is starting to be felt. The Nasdaq 100 and S&P 500 have remained roughly flat over the same period, while gold – usually a safe haven in a crisis – has seen only modest gains. Looking at performance so far in March, BTC is the only one of the three to see gains.
Bitcoin is also showing early signs of a break from its close correlation with struggling software stocks. Over the past five days, BlackRock’s spot bitcoin ETF (IBIT) is up 3.75%, while the iShares Expanded Tech-Software ETF (IGV) is down 2.45%.
The price action makes analysts cautiously optimistic that the crypto market could finally stabilize after months of decline.
Seller exhaustion
Aurélie Barthere, senior research analyst at Nansen, said an encouraging signal is BTC’s weak reaction to new geopolitical headlines.
Earlier in the week, a brief wave of optimism lifted stocks and crypto alongside falling oil prices, suggesting that markets were tentatively anticipating a potential de-escalation of the Iran conflict. But as the session progressed, that optimism faded and risk assets gave back some of their gains.
“Bitcoin’s downside sensitivity has been relatively limited,” she said, noting that some traditional benchmarks such as the Euro Stoxx index fell more sharply during the same period.
This resilience suggests that the marginal seller of Bitcoin may be less aggressive than that of stocks, Barthere added.
Changing Correlation with Gold
Another change that is catching the attention of traders is Bitcoin’s changing relationship with gold.
According to Bryan Tan, a trader at crypto trading firm Wintermute, the BTC-gold correlation has turned positive, going from -0.49 to +0.16 a week ago.
During the initial phase of the Middle East conflict, bitcoin fell while gold rebounded in a classic risk-off move, Tan noted. More recently, both assets have risen together as the U.S. dollar has weakened, suggesting that investors may be starting to treat them as beneficiaries of dollar weakness rather than opponents of risky trades.
“If this correlation continues to follow a positive trend, it shifts the narrative around BTC in a conflict environment from ‘sell the risky asset’ to something more nuanced,” Tan said.
Return of ETF flows
Improving Bitcoin ETF flows could also support recent strength.
Bitcoin ETF flows trended negatively for months after the October peak. But data from the past two weeks shows notable improvement, noted Joe Edwards, head of research at Enigma, including steady inflows into BlackRock’s IBIT fund, the largest of the Bitcoin ETFs.
A sustainable recovery in ETF demand could be crucial for bitcoin, he added. A sustainable recovery in ETF demand could be crucial, he added. Many analysts believe that Bitcoin’s next phase of growth depends on access to larger institutional capital pools, such as ETF investors in brokerage accounts. With that in mind, the recent wave of capital outflows is concerning, Edwards said.
The “good news,” he said, is that there are signs that this period is coming to an end.
IBIT has attracted nearly $1 billion in new inflows so far in March, after losing more than $3 billion between November and February, according to SoSoValue data.
According to Edwards, if the trend continues over the coming weeks, it could support a broader Bitcoin recovery in the second quarter.
