Bitcoin is Up 11% Since the Iran War Started While Gold and the S&P500 Are Down: JPMorgan’s Data Shows Why

It’s now over two weeks since the U.S. and Israeli forces struck Iran on February 28. Military operations began on a Saturday night, a time when all global markets were closed except for crypto. Bitcoin’s initial reaction to the geopolitical shock was one that seemingly confirmed every skeptic’s argument as it fell over 7%. Critics were quick to point out that Bitcoin continued to show signs of failure when geopolitical events like these occur. 

Fast forward to today and Bitcoin’s performance compared to other traditional markets tells a very different story. Bitcoin is up over 11% and over $230 billion has flowed into the crypto market since the start of the conflict. Contrastingly, the S&P 500 is down nearly -3%, the Nasdaq has slipped around -2% and even traditional safe haven commodities like gold is down by around -5%. Meanwhile, JPMorgan’s Managing Director, Nikolas Panigirtzoglou has highlighted a sharp divergence in money flows between Bitcoin and gold exchange traded funds. The SPDR Gold Shares ETF (GLD) has seen outflows of about 2.7% of assets under management, while BlackRock’s iShares Bitcoin Trust has recorded inflows of around 1.5% since the start of the war. 

The strength and resilience shown by Bitcoin thus far has prompted investors to reconsider crypto’s role in global markets. Rather than behaving like “digital gold”, Bitcoin is acting as something the traditional financial system does not have, a 24/7 liquidity pool that prices geopolitical risk in real time, then attracts institutional capital once traditional markets finally catches up. 

The Scoreboard: Bitcoin vs Every Major Asset Since Feb 28

The reality is that Bitcoin has outperformed nearly every major asset class since the start of the war on February 28. It is up over 11% and currently trading around the $73K region, even briefly touching a high of $74.4K, a level not seen since February 4. Over the same period, the S&P 500 has declined by -3% and is down for three consecutive weeks. The U.S. tech stocks haven’t fared any better as well with the Nasdaq down by around -2%. 

Even traditional safe haven assets that are often seen as the perfect hedge during wars have failed to deliver positive returns. Gold is down by nearly -5% while Silver has seen a much steeper correction of around -11%. 

Some of the largest global markets, specifically in Asia, show a very similar divergence at play. While BTC and crypto are showing growing momentum, South Korea’s KOSPI is down over 9% while Japan’s Nikkei has declined close to 7.5%. Oil is the only major asset to outperform Bitcoin during this period and unsurprisingly so as the war has triggered an unprecedented energy supply shock. WTI crude has risen by over 34% since the start of the conflict, from around $70 to peaking at $119.5. WTI crude is now trading back close to $100 following reports from the Guardian of strikes near Iran’s Kharg Island export hub. 

JP Morgan’s “Stark Divergence”: Institutional Money Is Rotating From Gold to Bitcoin 

Data from a new study from JPMorgan highlights what analysts describe as a “stark divergence” between investor behaviour in gold and Bitcoin since escalations began. The report, led by managing director Nikolas Panigirtzoglou shows that money has been moving in opposite directions between the two asset classes. The world’s largest gold ETF, SPDR Gold Shares (GLD), recorded outflows of 2.7% of its assets under management, suggesting that people were actually pulling funds from the traditional geopolitical hedge. Over the same time frame, BlackRock’s iShares Bitcoin Trust (IBIT) saw inflows of about 1.5%. This is a huge departure from the longstanding pattern of gold attracting capital during times of conflict. 

The inflows into BTC spot ETFs have also seen a trend reversal and been institutionally driven. Cumulative net inflows are now on a five day streak, with total inflows since February 28 around $1.34 billion. For context, before the conflict, BTC spot ETFs were seeing consistent outflows totalling close to $1.82 billion in January and February. This is the first time we are seeing trend shift since the October 10 liquidation cascade last year. 

Source: SoSoValue

IBIT alone now holds $57.11 billion worth of Bitcoin according to data from BitBo, suggesting that these flows are institutional portfolio allocation rather than speculative participation from retail investors. To add to this, Fidelity Wise Origin Bitcoin Fund (FBTC) has also printed large inflows during this period, meaning two of the largest asset managers in the world are adding exposure to Bitcoin during an active geopolitical conflict. 

Why Bitcoin Isn’t Digital Gold: It’s Something the System Doesn’t Have

The way markets have reacted since the war in Iran began has also raised questions around one of Bitcoin’s oldest narratives. The idea that it behaves like “digital gold” Under this thesis, however, both asset classes should have rallied simultaneously during a geopolitical event like this. Instead, the opposite has happened. BTC has moved higher while gold has declined, and the capital flows mentioned above reflects the same divergence. 

Bitcoin’s structural advantage over traditional safe-haven assets has come to the fore during this time. Bitcoin trades 24/7 and therefore it was the only major liquid market that was open when the first strikes took place on a Saturday night. This essentially allowed global investors to price in the geopolitical shock immediately, while gold and equity markets remained closed until Monday. After the initial selloff, Bitcoin rebounded quickly as ETF market makers and institutional investors stepped in, arbitraging the gap between the 24/7 spot market and the ETF trading window. This dynamic reflects a broader shift in institutional behavior: regulated investment vehicles such as Bitcoin ETFs are increasingly becoming the preferred gateway for large allocators, with a survey from State Street Investment Management showing that roughly two-thirds of institutional investors are now exploring crypto exposure within diversified portfolios.

What to Watch This Week: The FOMC Wildcard

The biggest event that will likely determine Bitcoin’s short term trajectory is this week’s FOMC meeting on March 18. The U.S. interest rate decision comes out at 2 P.M. ET this Wednesday and although the markets expect the Fed to hold rates steady, the updated dot plot and Summary of Economic Projection will be the real event. This will be the first set of Fed forecasts on future interest rate decisions since the Iran conflict began. A bullish case would be if the Fed maintains expectations of one or two rate cuts this year. On the flipside, if policymakers shift their projections to no rate cuts, Bitcoin could face macro headwinds. 

From a technical standpoint, Bitcoin is now attempting to break the key level of $74K. This is an area that has acted as resistance over the past two weeks, once on March 4 and again on March 13. A daily close above this level on the back of continued ETF inflows and positive news from the Fed midweek could set the stage for a breakout. 

As the conflict drags on, oil continues to be the key wildcard for markets this week. If there are any signs of a ceasefire coming into effect and the price per barrel falls back below $90, this could ease stagflation fears and support risk assets. However, if disruptions continue and oil stays above $100, Bitcoin will be put to the test to see whether its recent performance is able to hold during a period of energy-driven inflation. 

The smartest crypto minds already read our newsletter. Want in? Join them.