Before the Iran war broke out, Bitcoin spent months trading sideways while gold rallied to record levels.
At the time, gold was seen as the go-to safe haven; inflation concerns remained persistent and geopolitical tensions continued to build, while Bitcoin (BTC) failed to live up to that role.
Nearly a month after the US and Israel launched the first strikes on Iran on Feb. 28, that view is being challenged. Bitcoin initially fell to $63,176 on the news of the attacks but has since risen about 12% to $71,012, as of Wednesday.
Meanwhile, rising oil prices and inflation fears have weighed on gold, which fell 11% last week, marking its largest weekly loss since 1983.
Bitcoin has outperformed gold since the war started. Source: TradingView
However, Jonatan Randin, a senior market analyst at PrimeXBT, said Bitcoin continues to trade like a risk asset rather than a safe haven. It sells off alongside equities during geopolitical shocks.
“It’s range-bound and showing weakness within a broader downtrend. That’s not safe haven behavior,” he said.
Liquidity is the “dominant” Bitcoin price driver
In recent years, Bitcoin has reacted to global news events, including geopolitical shocks and social media posts from influential figures such as US President Donald Trump. Those moves tend to be short-lived.
Matthew Pinnock, co-founder of decentralized finance project Altura, told Cointelegraph that global liquidity remains the dominant driver of Bitcoin’s price, with macro conditions outweighing headline-driven volatility.
“BTC is trading as a high-beta liquidity asset, which means tighter financial conditions, such as higher real yields, a strong dollar and weaker [exchange-traded fund] inflows, reduce marginal capital and pressure price,” he said.
A September 2024 analysis compiled and written by Sam Callahan of treasury company OranjeBTC found that Bitcoin’s price had a 0.94 correlation with global liquidity between May 2013 and July 2024.
Callahan’s analysis also showed Bitcoin moved in the same direction as global M2 in 83% of 12-month periods, higher than gold, which logged 68.1%. The closest directional…
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