Bitcoin is trading at its highest level in a week as tensions in the Middle East continue to weigh on equities, while oil prices are driving higher amid concerns of a prolonged conflict.
The world's largest crypto is up 2.6% to $71,500, a level not seen since March 6, and has clawed back some of the losses since the U.S.-Israel conflict against Iran began on February 28, CoinGecko data shows.
Volatility tied to disruptions in the Strait of Hormuz, a narrow shipping corridor that handles roughly one-fifth of global oil shipments, has kept traders guessing on whether the conflict could be concluded swiftly.
U.S. President Donald Trump on Thursday said stopping Iran from acquiring nuclear weapons was a bigger priority than oil prices.
The comments sent Brent crude futures higher by 9.2% to close above $100 per barrel for the first time since Russia invaded Ukraine in 2022.
It also marked the largest one-day jump for the benchmark since around the start of the Coronavirus pandemic in May 2020.
Nic Puckrin, co-founder of Coin Bureau and lead market analyst, told Decrypt that prolonged oil shocks have eventually led to Bitcoin price weakness.
“The deciding factor for Bitcoin usually ends up being global liquidity,” Pickrin said. “Right now, investors appear to be pricing in little long-term disruption to liquidity conditions, driven by the hopes the oil crisis will be short-lived.”
“In 2022, the Bitcoin price drop was driven primarily by the Fed’s aggressive hiking cycle to curb inflation,” Puckrin added. “If the same scenario plays out and global liquidity tightens, Bitcoin’s current strength could be undermined.”
The S&P 500 dipped 1.52%, the Dow fell 1.56%, while the tech-heavy Nasdaq, whose makeup includes AI companies reliant on a steady supply of energy, fell hardest, down 1.73% to 24,533, Google Finance data shows.
But so far, Bitcoin has remained resilient.
Ryan McMillin, chief investment officer at Merkle Tree Capital, told Decrypt that Bitcoin’s recent strength against equities may reflect crypto-specific demand rather than a broader macro decoupling.
“Bitcoin’s strength relative to equities right now may reflect less of a macro decoupling and more of a structural demand shock originating within the crypto market itself,” McMillin said.
He pointed to strong demand for Strategy’s preferred issuance, STRC, which offers an 11.5% yield tied to Bitcoin exposure.
According to McMillin, the product has been attracting hundreds of millions of dollars in demand per day since the yield increase, with those inflows ultimately translating into purchases of Bitcoin.
“The potential demand for an 11.5% yield product tied to Bitcoin exposure appears extraordinary,” he said, adding that flows of that size can lift not only Bitcoin but the broader crypto market.
Still, McMillin cautioned that it is too early to conclude Bitcoin has decisively broken from traditional risk assets.
He noted the relationship between Bitcoin and equities inverted at times last year, when Bitcoin fell while stocks rallied.
“For now, it looks more like crypto-specific capital flows overwhelming the usual macro correlations,” he said.
