June 16, 2025
As geopolitical tensions flare in the Middle East, financial markets are reacting in predictable yet revealing ways. Gold, long considered the ultimate safe-haven asset, has surged to near-record highs, reaching $3,450 per ounce, just shy of its all-time peak of $3,500. Meanwhile, Bitcoin (BTC), often touted as “digital gold,” has failed to follow suit, instead mirroring the volatility of risk assets like equities. This divergence, highlighted in a recent Cointelegraph article, underscores a critical shift in how investors perceive Bitcoin during times of crisis. In this blog post, we explore why Bitcoin is trading more like equities than gold amid escalating Middle East tensions, the implications for its “safe haven” narrative, and what this means for investors and the broader crypto market.
The Geopolitical Backdrop: Middle East Tensions and Market Reactions
The recent escalation of military action in the Middle East, particularly following an Israeli missile strike on Iran on June 13, 2025, has sent shockwaves through global markets. Oil prices surged over 10%, reflecting fears of supply disruptions, while U.S. equity futures experienced a sharp sell-off. Gold, a traditional hedge against geopolitical uncertainty and inflation, climbed 30% year-to-date, reaching $3,450 per ounce on June 16, 2025, just $50 below its April peak. This rally aligns with gold’s historical role as a store of value during crises, driven by investor flight to safety and inflationary pressures from U.S. trade tariffs and global uncertainty.
In contrast, Bitcoin, trading at $101,095 after a 4% drop on June 13, 2025, has behaved more like a speculative asset, correlating closely with U.S. equities. The cryptocurrency market saw over $1 billion in liquidations, with Bitcoin and altcoins like Ethereum and Solana leading the losses. This risk-off sentiment, where investors flee volatile assets for safer havens like gold, U.S. Treasuries, and stable currencies, highlights Bitcoin’s struggle to establish itself as a geopolitical hedge.
Bitcoin as a Risk Asset: Why It Tracks Equities
Analysts, including IG Markets’ Tony Sycamore and LVRG Research’s Nick Ruck, argue that Bitcoin’s price dynamics align more closely with U.S. equities than with gold. Sycamore noted that Bitcoin’s movements mirror equity futures, particularly after the initial sell-off triggered by the Middle East escalation. He pointed out that Bitcoin’s ability to hold support between $95,000 and $100,000 could signal potential upside, potentially retesting its May 2025 high of $111,800, if equity markets stabilize. However, this correlation with equities underscores Bitcoin’s speculative nature rather than its safe-haven credentials.
Several factors contribute to Bitcoin’s risk-asset behavior:
- Market Sentiment and Liquidity: Bitcoin’s price is heavily influenced by short-term volatility and liquidity conditions, making it more akin to tech stocks than gold. Nick Ruck emphasized that traders focus on Bitcoin’s liquidity and volatility, not its store-of-value properties, during crises. This was evident in the $448.1 million in Bitcoin futures liquidations on June 13, 2025, reflecting panic selling amid geopolitical uncertainty.
- Correlation with Equities: Binance Research reported Bitcoin’s correlation with equities at 0.32 over the past 90 days, significantly higher than its 0.12 correlation with gold. This suggests that Bitcoin moves in tandem with risk-on assets like the S&P 500, particularly during market stress. Posts on X echoed this sentiment, with users like @ben_314159 and @TradesJayGann noting Bitcoin’s decline alongside equities while gold rallied.
- Institutional Influence: The influx of institutional money through Bitcoin ETFs has tied BTC’s price more closely to traditional financial markets. As @ben_314159 commented on X, “Bitcoin isn’t digital gold anymore. It’s more like tech stock now. Israel attacking Iran -> Gold up, Bitcoin and stock market down.” This shift reflects how institutional adoption, while boosting Bitcoin’s legitimacy, has also tethered it to equity market dynamics.
- Geopolitical Sensitivity: Unlike gold, which thrives during uncertainty, Bitcoin often suffers short-term sell-offs during geopolitical shocks. Historical examples, such as the Russia-Ukraine war in 2022 and Iran’s missile attack on Israel in 2024, show Bitcoin dipping initially before recovering, unlike gold’s consistent upward trajectory. Analysts like Bob Elliott have noted Bitcoin’s “near-perfect negative correlation” with gold-backed assets like PAXG during such events.
The Fading “Digital Gold” Narrative
Bitcoin’s proponents have long championed it as “digital gold,” citing its fixed supply, decentralization, and potential as a hedge against inflation and geopolitical risk. However, recent market behavior challenges this narrative. LVRG Research’s Nick Ruck told Cointelegraph that Bitcoin’s “digital gold” story is “slowly fading,” as it fails to mirror gold’s rally during crises. Instead, Bitcoin’s performance aligns with risk assets, driven by speculative trading and market sentiment rather than safe-haven demand.
This divergence was starkly evident during the Middle East escalation. While gold surged, Bitcoin and altcoins like Solana ($SOL) faced significant liquidations, with SOL dropping alongside BTC. DeFi Development Corp.’s (DFDV) $5 billion equity financing agreement to accumulate SOL, announced on June 15, 2025, briefly supported SOL’s price, but the broader crypto market’s risk-off reaction overshadowed this momentum.
Academic studies further question Bitcoin’s safe-haven status. A 2021 study found Bitcoin acted as a safe haven for the S&P 500 during COVID-19, but a 2018 analysis by Klein et al. argued it correlates positively with downward markets, unlike gold’s negative or zero correlation. During the COVID-19 period, gold served as a weak safe haven for energy commodities, while Bitcoin showed positive correlation, reinforcing its risk-asset behavior.
Counterarguments: Bitcoin’s Resilience and Potential
Despite its risk-asset behavior, some analysts see Bitcoin carving out a unique role. Binance Research noted that Bitcoin showed “signs of resilience” during a global sell-off in April 2025, holding steady while equities faltered. This resilience, coupled with rising long-term holder supply, suggests growing conviction among Bitcoin investors.
BlackRock’s Jay Jacobs highlighted Bitcoin’s declining correlation with equities, arguing it is becoming “less Nasdaq — more gold” as a global asset. He pointed to central banks’ diversification into gold and Bitcoin amid geopolitical fragmentation, citing concerns over frozen Russian assets and U.S.-China tensions. This trend could bolster Bitcoin’s safe-haven appeal over time, particularly if global crises persist.
Arthur Hayes, BitMEX co-founder, offered a contrarian view, suggesting Bitcoin could “pump” if Middle East tensions drive up energy prices. He argued that Bitcoin, as “stored energy in digital form,” benefits from rising energy costs, as mining profitability adjusts. Historical data from the 1973–1982 oil crises, where gold rose 380% and oil 412%, supports this perspective, though Bitcoin’s modern context differs.
X posts also reflect mixed sentiment.
@JoeConsorti argued that Bitcoin’s lower beta during crises indicates it as a “real risk-off trade,” while
@AlvaApp suggested traders are eyeing Bitcoin for “digital gold” potential despite its risk-asset correlation. These views suggest Bitcoin’s role is still evolving, potentially blending safe-haven and speculative characteristics.
Implications for Investors
For investors, Bitcoin’s alignment with equities during Middle East tensions presents both risks and opportunities:
- Short-Term Volatility: Bitcoin’s sensitivity to geopolitical shocks and equity market swings makes it a risky bet during crises. Investors should monitor support levels ($95,000–$100,000) and use stop-loss strategies to manage downside risk.
- Diversification: As @KamilShaheen19 noted on X, Bitcoin ETF inflows surpassed gold in May 2025, signaling strong investor interest. However, gold’s outperformance during crises suggests a balanced portfolio with both assets could hedge against uncertainty.
- Long-Term Potential: If Bitcoin decouples further from equities, as Jacobs and Svanevik suggest, it could reclaim its safe-haven narrative. Investors with a long-term horizon may benefit from holding BTC through volatility, especially if energy prices or inflation rise.
- Macro Considerations: The U.S. Federal Reserve’s policy meeting on June 18, 2025, with a 96.7% probability of maintaining rates at 4.25–4.50%, could stabilize risk assets like Bitcoin if sentiment improves. Conversely, further Middle East escalation could deepen crypto sell-offs.
Conclusion
Bitcoin’s performance amid Middle East tensions in June 2025 reaffirms its status as a risk asset, trading more like equities than gold. While gold surged to near-record highs, Bitcoin’s 4% drop and high liquidation volumes underscored its speculative nature, challenging the “digital gold” narrative. Analysts like Tony Sycamore and Nick Ruck highlight Bitcoin’s correlation with equities, driven by liquidity, institutional influence, and market sentiment. However, voices like Jay Jacobs and Arthur Hayes suggest Bitcoin could evolve into a safe-haven asset as it decouples from equities and aligns with global diversification trends.
For now, investors should approach Bitcoin with caution, recognizing its volatility during geopolitical crises while staying open to its long-term potential. As the crypto market navigates these turbulent times, Bitcoin’s role—whether as a speculative tech stock or an emerging safe haven—remains a critical question for the future of finance.
Sources
- Cointelegraph: “Bitcoin closer to equities than gold as Middle East war deepens”
- Cointelegraph: “Geopolitical tensions fuel central bank shift toward gold, crypto — BlackRock exec”
- Cointelegraph: “Bitcoin to pump if oil, energy prices surge amid Middle East tension: Hayes”
- BitcoinEthereumNews: “Gold Nears Record High Amid Middle East Tensions While Bitcoin Remains a Risk Asset”
- Cointelegraph: “Crypto Prices Crash as Tensions in the Middle East feud intensifies”
- PMC: “Comparing gold’s and Bitcoin’s safe-haven roles against energy commodities during the COVID-19 outbreak”
- Posts on X: Sentiment from @ben_314159, @TradesJayGann, @AlvaApp, @JoeConsorti, @KamilShaheen19
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrencies are highly volatile, and investors should conduct their own research and consult professional advisors before making decisions.
