Bitcoin Tops Stocks and Gold Amid Market Turmoil From Middle East Conflict

Bitcoin has unexpectedly outperformed both precious metals and U.S. equities since the conflict in the Middle East escalated, helping improve market sentiment after a difficult start to the year for the cryptocurrency.

The outbreak of hostilities involving Iran, Israel, and the United States has unsettled global financial markets. Despite the uncertainty, bitcoin has moved higher rather than falling alongside traditional risk assets. Data shows the cryptocurrency has gained roughly 3.5% to around $68,000 since the conflict began a little over a week ago.

In contrast, several major assets have declined during the same period. Gold has dropped about 5% and silver has fallen nearly 12%. U.S. equities have also weakened, with the Nasdaq-100 down around 1%, while the S&P 500 has slipped roughly 1.5%.

The gap widened over the past day as bitcoin climbed more than 2.5%, even as U.S. equity futures continued to trade lower. Oil markets have been especially volatile. West Texas Intermediate crude briefly jumped to about $116 per barrel early Monday, at one stage up nearly 60% from levels seen before the conflict. However, remarks from leaders of the Group of Seven about the possibility of releasing strategic reserves helped ease the surge, pulling crude back to around $100 per barrel.

At the same time, the U.S. dollar strengthened as investors sought safer assets. The U.S. Dollar Index climbed more than 1% to just above 99. Government bond yields also rose, with the benchmark U.S. 10-Year Treasury yield increasing from just below 4% before the conflict to roughly 4.2%.

Bitcoin’s recent outperformance follows a sharp correction earlier in the year. The asset had plunged to nearly $60,000 after peaking above $126,000 in October. Given the already fragile market sentiment when the Middle East conflict began, many traders anticipated further declines rather than a rebound. Instead, bitcoin has once again defied consensus expectations.

Even so, the cryptocurrency still shows some correlation with technology stocks. The iShares Expanded Tech Software ETF—a widely watched gauge for software companies—has climbed about 7% since the conflict began, rebounding from roughly $76 to close near $88 on Friday.

Signals from derivatives markets suggest that conditions may be stabilizing. Open interest in coin-margined futures, which tracks contracts settled in bitcoin rather than dollars, has declined, indicating that excess leverage is being flushed out of the system. Meanwhile, funding rates on perpetual futures remain negative at about –3.5%, meaning traders with short positions are paying those holding longs—an indication that bearish positioning remains crowded.

Another notable development is the reappearance of the so-called Coinbase premium. This metric measures the price difference between bitcoin on Coinbase and offshore exchanges and is often used as a signal of U.S. institutional demand. Its return, along with inflows into spot bitcoin ETFs, suggests that institutional investors may be stepping back into the market and accumulating bitcoin at what they view as oversold levels.