The recent conflict in the Middle East has had far-reaching effects on global markets, but one asset seems to be bucking the trend: Bitcoin.
The price of the cryptocurrency has been surprisingly resilient in the face of geopolitical uncertainty, reaching a two-month high above $78,000 last week and holding its gains since then. While historically, Bitcoin's price has dipped during periods of conflict, this time it seems to be immune to the effects of the war.
Analysts point to several factors contributing to Bitcoin's stability. Institutional investors have been increasing their exposure to the cryptocurrency, with over $3 billion in spot Exchange Traded Funds (ETFs) inflows since March. This is a clear indication that investors are maintaining a long-term view of BTC and increasing their holdings.
Another key factor is the growing liquidity in global markets. The increase in M2 money supply has been rising over the past six months, and historically, Bitcoin has shown a positive correlation with global liquidity growth. This suggests that excess capital is flowing into risk assets during periods of monetary expansion, supporting the view that Bitcoin's recent strength is due to this factor.
Furthermore, the growing adoption of Bitcoin as a tool for payment in various regions could also be contributing to its resilience. The proposal by Iran to accept Bitcoin and other cryptocurrencies for transit fees in the Strait of Hormuz indicates crypto's increasing role in global trade. If implemented, this could mark a key milestone in adoption, particularly for regions facing financial constraints.
The technical analysis of Bitcoin's chart suggests that it may be forming a bottom, with potential for further gains. The Relative Strength Index (RSI) reads 46 on the weekly chart, pointing upward toward the neutral level of 50 after recovering from oversold territory, indicating fading bearish momentum. The Moving Average Convergence Divergence (MACD) indicator also shows a bullish crossover last week, with a positive histogram supporting the bullish thesis.