The outbreak of war in the Middle East shook global markets, but Bitcoin did something unexpected: outperform stocks.
Bitcoin is up about 3.5% to $68,000 since the conflict between Iran, Israel and the United States began just over a week ago, according to CoinDesk data. 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%.
Divergence has widened over the past 24 hours, with bitcoin up more than 2.5% while US stock futures remain in the red. WTI crude briefly jumped to around $116 a barrel early Monday, up about 60% since the conflict began. However, comments from G7 leaders on the possibility of releasing oil reserves helped dampen the recovery, with crude falling to around $100 a barrel.
At the same time, the U.S. dollar strengthened, with the DXY index rising more than 1% to just above 99. Treasury yields also climbed, with the U.S. 10-year yield rising from just under 4% before the conflict to around 4.2%.
Bitcoin’s outperformance comes after weeks of brutal selling that saw prices fall by almost half, to around $60,000, from a record high of more than $126,000 reached in October. With sentiment already fragile at the start of the conflict, many expected the recession to deepen rather than reverse. Instead, the market did what it often does best: take the consensus by surprise.
Monitoring technological actions
Despite bitcoin’s relative strength, it still exhibits correlation with tech stocks. The iShares Expanded Tech Software ETF (IGV), a widely followed benchmark in the software sector, has gained about 7% since the start of the dispute after rebounding from about $76 to close Friday at nearly $88.
Signals from the derivatives market could indicate stabilization. Open interest in margined futures, which measure the total value of outstanding contracts settled in bitcoin rather than dollars, has declined, indicating that leverage is being eliminated from the system. Funding rates, i.e. periodic payments between long and short traders on perpetual futures contracts, remain negative at around -3.5%, meaning short sellers are paying out long positions, a sign that bearish positioning remains saturated.
At the same time, Coinbase premium is back. This measures the price difference between bitcoin on Coinbase and offshore exchanges and is often used as an indicator of US institutional demand. Its re-emergence, alongside ETF spot inflows, suggests that institutional buyers may return to the market and find demand at these oversold levels.
