Bitcoin’s surprising stability during global tensions
Bitcoin’s behavior over the past week has caught the attention of traders and analysts. While geopolitical tensions escalated around the Iran conflict, and markets faced risks from oil supply disruptions to private credit stress, Bitcoin managed to climb back toward $71,000. That’s about a 7% recovery from Sunday’s lows.
What’s interesting here is the relative strength. The Nasdaq 100 and S&P 500 have been roughly flat over the same period. Gold, which typically serves as a safe haven during turmoil, has only posted modest gains. Looking at March performance so far, Bitcoin is actually the only one of these three assets showing positive returns.
Breaking correlations with software stocks
There’s another shift happening that traders are noticing. Bitcoin appears to be breaking away from its tight correlation with 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%. That divergence is significant because for months, Bitcoin has largely moved in sync with tech stocks.
Aurelie Barthere, principal research analyst at Nansen, pointed out that Bitcoin’s downside sensitivity has been relatively limited compared to some traditional benchmarks. The Euro Stoxx index, for instance, has fallen more sharply during the same period. This suggests the marginal seller in Bitcoin might be less aggressive than in equities.
The changing relationship with gold
Perhaps the most intriguing development is Bitcoin’s changing correlation with gold. According to Bryan Tan, a trader at crypto trading firm Wintermute, the Bitcoin-gold correlation has flipped positive, moving to +0.16 from -0.49 just a week ago.
During the initial phase of the Middle East conflict, Bitcoin fell while gold rallied in what Tan described as a classic risk-off move. More recently, both assets have risen together while the U.S. dollar weakened. This suggests investors might be starting to treat them as beneficiaries of dollar softness rather than opposing risk trades.
“If this correlation continues trending positively,” Tan noted, “it shifts the narrative around Bitcoin in a conflict environment from ‘sell the risk asset’ to something more nuanced.”
ETF flows showing improvement
Another factor supporting Bitcoin’s recent strength might be improving ETF flows. Bitcoin ETF flows had been trending negative for months following the peak in October. But data from the past two weeks shows a notable improvement, according to Joe Edwards, head of research at Enigma.
IBIT has attracted nearly $1 billion in fresh inflows so far in March, after losing more than $3 billion between November and February. That’s a significant turnaround. A sustained recovery in ETF demand could be critical for Bitcoin’s next phase, Edwards suggested. Many analysts believe Bitcoin’s growth depends on access to deeper institutional capital pools, like ETF investors in brokerage accounts.
The recent wave of outflows was concerning, Edwards said, but there are signs that period might be ending. If the trend holds through the coming weeks, it could support a broader Bitcoin recovery into the second quarter.
What strikes me about this situation is how Bitcoin seems to be finding its own footing. It’s not just following stocks or reacting predictably to geopolitical events. There’s a complexity to its behavior now that wasn’t as apparent before. Maybe it’s maturing as an asset class, or perhaps we’re seeing different types of investors enter the market with different priorities.
Either way, the resilience at $70,000 is noteworthy. It suggests there’s underlying support that wasn’t there during previous market stresses. I think we’re watching Bitcoin develop its own identity separate from traditional risk assets, and that could have interesting implications for portfolio construction going forward.
