Bitcoin has been outperforming several traditional assets since tensions escalated in the Middle East, helping lift sentiment after a challenging start to the year for the cryptocurrency market.
The conflict involving Iran, Israel, and the United States has unsettled global markets, but bitcoin has taken a different path. Since the fighting began a little over a week ago, the cryptocurrency has gained roughly 3.5%, climbing to around $68,000.
Over the same period, many major assets have moved lower. Gold has dropped about 5%, while silver has fallen roughly 12%. U.S. equities have also slipped, with the Nasdaq-100 declining about 1% and the S&P 500 losing around 1.5%.
The divergence has become more pronounced over the past 24 hours. Bitcoin advanced more than 2.5% while U.S. stock futures remained under pressure. Energy markets, meanwhile, experienced sharp volatility. West Texas Intermediate crude briefly surged to approximately $116 per barrel early Monday—at one point up nearly 60% since the conflict began. However, statements from leaders of the Group of Seven about the possible release of strategic reserves helped ease the rally, bringing prices back to around $100 per barrel.
At the same time, investors have continued moving into the U.S. dollar. The U.S. Dollar Index rose more than 1% to slightly above 99. Government bond yields also climbed, with the benchmark U.S. 10-Year Treasury yield rising from just under 4% before the conflict to about 4.2%.
Bitcoin’s recent strength follows a sharp sell-off earlier this year. The asset had dropped to around $60,000 after reaching a record high above $126,000 in October. With market sentiment already fragile when the conflict erupted, many traders expected the downturn to deepen. Instead, the rebound has once again surprised the market.
Despite outperforming many assets, bitcoin continues to show some correlation with technology stocks. The iShares Expanded Tech Software ETF—a widely followed gauge for software companies—has gained about 7% since the conflict began, rebounding from roughly $76 to close near $88 last Friday.
Activity in derivatives markets suggests conditions may be stabilizing. Open interest in coin-margined bitcoin futures, which tracks contracts settled in BTC rather than dollars, has declined, indicating that leverage is being reduced across the market. Meanwhile, funding rates on perpetual futures remain negative at around –3.5%, meaning traders holding short positions are paying those with long positions—an indication that bearish bets remain crowded.
Another notable development is the return of the Coinbase premium. This measure tracks the price difference between bitcoin on Coinbase and offshore trading platforms and is often viewed as a signal of U.S. institutional demand. Its reappearance, combined with inflows into spot bitcoin ETFs, suggests institutional investors may be returning to the market and accumulating bitcoin at what they see as oversold levels.
