Bitcoin’s resilience during market stress
Bitcoin’s recent performance is starting to get noticed on trading desks. The cryptocurrency climbed to nearly $71,000, up about 7% from Sunday’s lows. This 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 serves as a safe haven during turmoil, has only posted modest gains. Looking at March performance so far, Bitcoin is the only one of these three actually showing gains.
Breaking correlations with software stocks
There’s something else happening that traders are watching. 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’s a notable divergence.
Aurelie Barthere, principal research analyst at Nansen, pointed out one encouraging signal: how little Bitcoin has reacted to fresh geopolitical headlines. “Bitcoin’s downside sensitivity has been relatively limited,” she said, noting that some traditional benchmarks like the Euro Stoxx index have fallen more sharply during the same period.
This resilience suggests something about market dynamics. Barthere thinks the marginal seller in bitcoin might be less aggressive than in equities. That’s a subtle but important shift in how the market behaves under pressure.
The changing relationship with gold
Another shift catching attention is bitcoin’s changing relationship 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, 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.” That’s a significant potential change in how the market views Bitcoin’s role during geopolitical stress.
ETF flows showing improvement
Improving bitcoin ETF flows might also be supporting the recent strength. 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.
He pointed to consistent inflows into BlackRock’s IBIT fund, the largest of the bitcoin ETFs. 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.
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, but Edwards sees signs that period might be ending.
If the trend holds through the coming weeks, he thinks it could support a broader bitcoin recovery into the second quarter. That’s not a guarantee, of course, but it’s something worth watching as the market continues to evolve.
