The outbreak of war in the Middle East has shaken global markets, but bitcoin has been doing something unexpected: outperforming stocks.
Bitcoin is up about 3.5% to $68,000 since the conflict between Iran, Israel and the United States began just over a week ago, according to data from CoinDesk. Over the same period, it has outperformed most major assets. Gold is down about 5%, silver is down about 12%, the Nasdaq 100 is down about 1%, and the S&P 500 is down about 1.5%.
The divergence has widened in the last 24 hours, with bitcoin rising more than 2.5% while US stock futures remain in the red. WTI crude briefly rose to around $116 a barrel early on Monday, at one point up about 60% since the conflict began. However, comments from G7 leaders about the possible release of oil reserves helped cool the rally, with crude oil retreating to around $100 per barrel.
Meanwhile, the US dollar has strengthened and the DXY index has risen more than 1% to just above 99. Treasury yields have also risen, with the US 10-year bond yield rising from just under 4% before the conflict to around 4.2%.
Bitcoin’s outperformance comes after weeks of a brutal sell-off that saw prices nearly halve to around $60,000 from an all-time high of more than $126,000 in October. Since sentiment was already fragile when the conflict began, many expected the crisis to deepen rather than reverse. Instead, the market has done what it often does best: catch the consensus off guard.
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Despite bitcoin’s relative strength, it still shows correlation with tech stocks. The iShares Expanded Tech Software ETF (IGV), a widely followed software sector benchmark, has gained about 7% since the conflict began after recovering from about $76 to close Friday near $88.
Signals from the derivatives market may indicate stabilization. Open interest in coin-margined futures, which measures the total value of outstanding contracts settled in bitcoins instead of dollars, has decreased, indicating that leverage is being removed from the system. Funding rates, periodic payments between long and short traders in perpetual futures, remain negative at around -3.5%, meaning short sellers are paying out long positions, a sign that bearish positioning remains saturated.
At the same time, Coinbase premium has returned. This measures the price difference between bitcoin on Coinbase and offshore exchanges and is often used as an indicator of US institutional demand. Its reappearance, along with spot ETF inflows, suggests that institutional buyers may be returning to the market and finding demand at these oversold levels.
