Bitcoin Rallies 6% on Middle East War Fears as Institutional Funds See Three Straight Weeks of Net Inflows

▲ Bitcoin (BTC), War, Geopolitical Crisis / ChatGPT-generated image ©

The era in which interest rates and macroeconomic indicators dictated the price of Bitcoin (BTC) for years is fading, replaced by rising war tensions in the Middle East and international oil prices threatening to reach $200 per barrel as the new dominant drivers. Even amid extreme market anxiety, the leading cryptocurrency is emerging as a powerful safe haven against geopolitical crises, drawing in investor capital.

According to DL News on March 13 (local time), James Butterfill, head of research at crypto investment firm CoinShares, said that macroeconomic data has lost its grip on Bitcoin’s price movement, with geopolitical factors taking its place. He explained that the previous correlation between interest rate expectations and cryptocurrencies has broken down, and that this paradigm shift is currently working very favorably for Bitcoin.

Recently, investors have largely ignored traditional negative indicators that in the past would have triggered severe volatility, such as last week’s U.S. employment data, which fell far short of expectations. Instead, as tensions escalate among the United States, Israel, and Iran, investors are increasingly treating Bitcoin as a hedge against geopolitical turmoil and buying aggressively. Since the outbreak of armed conflict among these nations, Bitcoin has surged 6%, while gold rose 1% and stock markets declined.

Butterfill emphasized that the current phenomenon represents an analytically significant and unusual divergence. As oil prices continue to climb amid the Middle East conflict and fears of resurging inflation grow due to rising energy costs, expectations for a U.S. rate cut have naturally dropped to a cycle low of 23%, and economic growth forecasts are weakening. Under typical past conditions, such an environment would have triggered intense selling pressure on Bitcoin, yet in reality the opposite—a strong buying rally—is unfolding.

The global capital markets are now focused squarely on crude oil. Iran has warned that if attacks by the United States and Israel continue, international oil prices could double to $200 per barrel, fueling widespread macroeconomic fears.

Despite volatile oil prices and escalating crises, institutional investors remain steadfast. Crypto-related investment products have already recorded large net inflows for three consecutive weeks. Butterfill interpreted this as a clear signal that institutions are not viewing Bitcoin as a risky asset to be sold off amid geopolitical turbulence, but rather as a valuable asset to hold firmly.

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