Since the onset of the war between US-Israel and Iran, Bitcoin has experienced a modest rise in value. As of the writing of this article, Bitcoin has reached the $71.500 level, as noted by CoinMarketCap.
On the other hand, investment assets like gold, stocks, and bonds are stagnant and even declining.
James Butterfill, Head of Research in CoinShares, explained the reason for Bitcoin’s increase to Decrypt, “Since the onset of the crisis, Bitcoin has risen approximately 6 to 6.5%, while gold is up around 1 to 1.5% and equities have declined. This divergence is, in our view, analytically significant."
Butterfill added, “Bitcoin tends to perform well during geopolitical dislocations, not despite its volatility, but in part because of its properties as a non-sovereign, censorship-resistant asset.”
Also Read: Volatility Is: Definition, Cause, and Impacts on Cryptocurrency
Butterfill also pointed out how investors are starting to pull out funds from the US Treasury. This shows that traditional assets that are considered safe have lost part of their appeal.
“This is now our third consecutive week of net inflows into digital asset investment products,” said Butterfill. In a letter to Decrypt, he revealed that investors have deposited $500 million in a week.
“We read this as a meaningful signal: institutional investors are treating Bitcoin as an asset worth holding through geopolitical turbulence, not one to be exited.”
However, not all cryptocurrencies are experiencing the same increase as Bitcoin. CoinShares notes that asset categories tied to disposable income, like speculative trading and meme coins, are not recommended as long as household budget is under pressure.
