Before the Iran war broke out, Bitcoin spent months trading sideways while gold rallied to record levels.
At the time, gold was seen as the go-to safe haven; inflation concerns remained persistent and geopolitical tensions continued to build, while Bitcoin (BTC) failed to live up to that role.
Nearly a month after the US and Israel launched the first strikes on Iran on Feb. 28, that view is being challenged. Bitcoin initially fell to $63,176 on the news of the attacks but has since risen about 12% to $71,012, as of Wednesday.
Meanwhile, rising oil prices and inflation fears have weighed on gold, which fell 11% last week, marking its largest weekly loss since 1983.
However, Jonatan Randin, a senior market analyst at PrimeXBT, said Bitcoin continues to trade like a risk asset rather than a safe haven. It sells off alongside equities during geopolitical shocks.
“It’s range-bound and showing weakness within a broader downtrend. That’s not safe haven behavior,” he said.
Liquidity is the “dominant” Bitcoin price driver
In recent years, Bitcoin has reacted to global news events, including geopolitical shocks and social media posts from influential figures such as US President Donald Trump. Those moves tend to be short-lived.
Matthew Pinnock, co-founder of decentralized finance project Altura, told Cointelegraph that global liquidity remains the dominant driver of Bitcoin’s price, with macro conditions outweighing headline-driven volatility.
“BTC is trading as a high-beta liquidity asset, which means tighter financial conditions, such as higher real yields, a strong dollar and weaker [exchange-traded fund] inflows, reduce marginal capital and pressure price,” he said.
A September 2024 analysis compiled and written by Sam Callahan of treasury company OranjeBTC found that Bitcoin’s price had a 0.94 correlation with global liquidity between May 2013 and July 2024.
Callahan’s analysis also showed Bitcoin moved in the same direction as global M2 in 83% of 12-month periods, higher than gold, which logged 68.1%. The closest directional alignment after Bitcoin was the S&P 500 index, which represents US large-cap equities and is an often-cited benchmark for risk assets.
Randin said more recent data reflected a similar pattern, pointing to global liquidity rising in the third quarter of 2025, around the time when Bitcoin reached a new all-time high.
The divergence highlights a broader issue with Bitcoin’s safe haven narrative. While it has outperformed gold over certain periods since the war began, its sensitivity to liquidity conditions means it reacts more to financial tightening than to geopolitical stress itself. That complicates the idea of Bitcoin as “digital gold,” particularly in environments where inflation and rates move in tandem.
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Oil shock complicates Bitcoin’s inflation narrative
Near-term inflation concerns have been shaping market expectations since the conflict began, driven by rising oil prices and supply disruptions following the closure of the Strait of Hormuz, one of the most important shipping routes in the world.
Randin said rising inflation concerns tied to geopolitical shocks tend to work against Bitcoin in the short term, as higher oil prices feed into inflation expectations, reduce the likelihood of rate cuts and keep real yields elevated. That chain of events tightens financial conditions and suppresses risk appetite, limiting demand for assets like Bitcoin.
In that sense, Bitcoin is not reacting to inflation itself, but to the policy response that follows, said Randin.
The Iran conflict pushed oil prices above $110 while the Federal Reserve raised its 2026 personal consumption expenditures inflation forecast to 2.7% and signaled a more cautious easing path.
“Bitcoin could be better understood as a long-term monetary debasement hedge rather than a short-term inflation hedge, and that’s a critical distinction,” Randin said.
“It responds to the expansion of money supply over multi-year cycles, not to CPI prints. On the timescale of a war-driven oil shock, it still behaves like the risk asset it is.”
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Bitcoin rebounds during Iran conflict but risk profile remains
Bitcoin’s behavior during the Iran conflict still aligns with a risk asset. Each escalation has triggered selloffs, liquidation cascades and tighter correlation with equities, even as Bitcoin has held up better than traditional assets over certain periods.
“But it’s important to remember the context. Bitcoin entered this conflict already in a technical bear market, down over 40% from its October highs and well ahead of equities in pricing in deteriorating conditions,” Randin said.
So while it has held up relatively well since the strikes began, outperforming the S&P 500, gold and silver over certain windows, it hasn’t given us any meaningful directional move.”
A structural shift would require a clear break from that pattern, and those signals have yet to appear.
Onchain data points to a different undercurrent. Continued accumulation, declining exchange reserves and growing holdings among large wallets suggest positioning is building, even if price action has not reflected it.
However, that positioning is still constrained by macro conditions.
“Right now, inflation driven by a hike in oil prices due to geopolitical factors is pushing yields higher and keeping central banks hawkish, which tightens liquidity. That creates a ‘bad inflation’ regime where BTC falls alongside other risk assets,” Pinnock said.
“The inflation hedge thesis breaks because Bitcoin responds more to monetary expansion than to inflation itself, and currently, conditions are restrictive, not stimulative,” he added.
Until liquidity conditions ease and Bitcoin decouples from equities during stress events, its role as a safe haven remains unproven.
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