Bitcoin’s surprising stability during market turmoil
Bitcoin has been holding around $70,000 this week, which honestly surprised some traders given everything happening in global markets. The cryptocurrency climbed to nearly $71,000 at one point, up about 7% from Sunday’s lows. That happened even as geopolitical tensions escalated over the Iran conflict and markets faced risks from oil supply disruptions to stress in private credit markets.
What’s interesting is how this compares to other assets. The Nasdaq 100 and S&P 500 have been roughly flat over the same period. Gold, which usually gets a boost during turmoil, has only posted modest gains. Looking at March performance so far, Bitcoin is actually the only one of these three showing gains.
Breaking away from software stocks
There’s another shift happening that traders are noticing. Bitcoin appears to be breaking its tight correlation with software stocks, which have been struggling. 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 pretty significant when you think about how closely these assets have moved together in recent years.
Aurelie Barthere, principal research analyst at Nansen, pointed out something I found interesting. She noted how little Bitcoin has reacted to fresh geopolitical headlines. “Bitcoin’s downside sensitivity has been relatively limited,” she said, adding that some traditional benchmarks like the Euro Stoxx index have fallen more sharply during the same period.
Changing relationship with gold
Another development catching attention 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 called a “classic risk-off move.” More recently though, both assets have risen together while the U.S. dollar weakened. This suggests investors might be starting to treat them both 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
There’s also some positive news on the ETF front. Bitcoin ETF flows had been trending negative for months following the peak in October. But data from the past two weeks shows 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, according to SoSoValue data. Edwards thinks a sustained recovery in ETF demand could be critical for Bitcoin’s next phase of growth, since many analysts believe Bitcoin’s future depends on access to deeper institutional capital pools through ETF investors in brokerage accounts.
The recent wave of outflows was concerning, Edwards admitted, but he sees signs that period might be ending. If the trend holds through the coming weeks, he argues it could support a broader Bitcoin recovery into the second quarter.
What strikes me about all this is how Bitcoin’s role seems to be evolving in real time. It’s not just behaving like a pure risk asset anymore, nor is it exactly mimicking gold. The market appears to be figuring out what Bitcoin actually is in different contexts, and that process itself might be creating some stability where there wasn’t much before.
