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While Bitcoin has come under scrutiny for its performance during periods of geopolitical tension, recent data suggests otherwise.
Recent data from Bitcoin-only brokerage exchange River Financial shows that $BTC has actually performed better than most legacy assets, contrary to popular belief. This emphasizes its dual nature as a risk asset and a proper store of value.
Key Points
- The River Financial data show that as of March 23, Bitcoin has outpaced gold and the S&P 500 ($SPX) in price performance since the renewed tensions in the Middle East.
- Israel and the US launched missiles at multiple cities across Iran on February 28, claiming the life of its Supreme Leader, Ali Khamenei.
- Since February 28, $BTC has increased by 12%, while gold has dropped 16% and the $SPX by 4%.
- Bitcoin has outperformed gold and the S&P 500 in several other periods of adverse market conditions, including the COVID outbreak and the Russia-Ukraine war.
- This clear outperformance in the face of global market turmoil in compared with these established assets highlights its emerging reputation as a hedge against uncertainty.
Bitcoin and the Middle East Crisis
For perspective, Israel and the US launched missiles at multiple cities across Iran on February 28, claiming the life of its Supreme Leader, Ali Khamenei.
Since then, Iran and Israel have fired retaliatory and crossfire strikes, with the latest launch being a missile attack on March 21 near Israel’s main nuclear research center. Meanwhile, the prolonged attacks have affected global markets as investors take cautionary steps.
The market uncertainties have also weighed on the crypto market. Bitcoin, the sector’s leader, has come under increased pressure amid the prolonged tension. However, it has weathered this uncertainty, showing admirable resilience and delivering better returns than the so-called safe-haven assets.
$BTC Outperforms Gold and the S&P 500
The River Financial data show that as of March 23, Bitcoin has outpaced gold and the S&P 500 ($SPX) in price performance since the renewed tensions in the Middle East. Since February 28, $BTC has increased by 12%, compared to the negative trends seen in the other aforementioned assets.
In the same timeframe, gold has dropped 16% and the $SPX by 4%, reacting adversely to the geopolitical tension.
Notably, these assets have reputations as established financial vehicles in the global market. Gold comes across as a store of value and hedge against inflation and economic uncertainty, while the S&P 500 is favored for its historical resilience and consistency in performance.
These qualities make them easier picks during periods of global skepticism. Yet they fall short of the returns on investment that Bitcoin has delivered since the Iran conflict began, underscoring the cryptocurrency’s sheer strength and emerging reputation as a hedge against uncertainty.
Bitcoin Outperformance Extends Beyond Current Tension
Meanwhile, this price action extends beyond the current conflict in Iran. The River Financial data shows that Bitcoin has outperformed gold and the S&P 500 in several other periods of adverse market conditions.
For context, during the first US-Iran conflict, which began on January 3, 2020, $BTC recorded a 20% return over 60 days. In the same timeframe, gold recorded a milder 6% growth and the S&P 500 a negative 7% return.
Other notable events, like the COVID-19 outbreak and Russia’s invasion of Ukraine, also saw Bitcoin perform better. During the pandemic, $BTC grew by 21%, gold by 3%, and the $SPX by 2%. Within 60 days of the February 24, 2022, Russian invasion of Ukraine, Bitcoin rose 15%, and the $SPX by 3%, while gold dropped 9%.
Interestingly, this obvious outperformance in the face of global market turmoil in comparison to these established assets has shown that it is a better play. It does not mean Bitcoin is immune to these adverse conditions. Rather, it has offered more stability and investment returns than gold and the S&P 500.