Key Insights:
- Bitcoin gained over 12% during the conflict, outperforming gold, equities, and silver while attracting strong institutional inflows through ETFs.
- Spot Bitcoin ETFs recorded $763 million in weekly inflows, with BlackRock’s IBIT leading demand.
- Upcoming Fed decisions and March 27 options expiry may decide the next market direction.
Bitcoin moved higher during Monday’s Asian trading hours as investors reacted to early signs that tensions in the Middle East may start easing.
The largest cryptocurrency briefly climbed 3.7% to $74,416 before settling near $73,800 in early London trading, marking its strongest level since the conflict began on February 28.
Ethereum also posted stronger gains, rising 7.4% to $2,287, while Solana advanced 6.2% and XRP added 4.9% during the same session.
Market sentiment improved after reports confirmed that tankers passed through the Strait of Hormuz for the first time since hostilities disrupted the route.
The move followed comments from US President Donald Trump urging international cooperation to reopen the vital shipping corridor, easing fears of prolonged supply disruptions.
At the same time, inflows into US-listed spot crypto exchange-traded funds continued to rise, reinforcing the perception that institutional demand remains steady despite geopolitical risks.
Bitcoin outperforms gold and equities during conflict
Bitcoin has risen over 12% since the war broke out on February 28, whereas traditional safe-haven assets have not been able to keep the momentum.
Gold fell approximately 5% during the identical timeframe, the S and P 500 dropped approximately 1% and silver lost near 9% as volatility extended across the world markets.
Energy markets responded in various ways, as the Brent crude shot briefly above 115 per barrel amid a report by Iran that it had mined portions of the Strait of Hormuz.
The surge in oil prices first caused the onset of the risk-off behavior, which drove the digital assets down before buyers jumped back to their positions when the disruption of supply started to be forgotten.
The crypto market also lost over $128 billion in capitalization within minutes of the first days of the conflict as leveraged positions were forced to be liquidated.
Nonetheless, the prices remained stable at the levels of around $66,000 at the beginning of March and slowly established higher lows, which indicated that the pressure to sell was already absorbed.
Institutional flows grow as ETF demand accelerates
Institutional interest continued to build as the twelve US spot Bitcoin ETFs recorded net inflows of $763 million during the week of March 9 to 13.The most recent data was the third successive week of positive flows, which put total net inflows in March at about $1.3 billion.
The iShares Bitcoin Trust of BlackRock outpaced the field and received almost three-quarters of the total weekly inflows and there is a high conviction of large investors.
The fund received $143.6 million on March 13 alone, which is approximately 2, 040 BTC, or approximately 80% of the total ETF demand in a day.
Since their launch in January 2024, US spot ETFs have attracted more than $55 billion in cumulative inflows, pushing total assets under management near $62 billion.
BlackRock also introduced the iShares Staked Ethereum Trust on Nasdaq on March 12, its first crypto fund designed to include staking rewards.
Market behavior mirrors previous geopolitical crisis patterns
The present market response is akin to previous geopolitical shocks, such as the invasion of Ukraine by Russia in February 2022, at which the fall in prices occurred and then recovered.
Sudden sell-offs due to US attacks on Iran were also caused in June 2025 but this saw the market fall and soon thereafter a sharp rebound took place.
One key difference this time is that the market had already corrected heavily before the conflict began, reducing the amount of speculative leverage.
From the October peak through late February, the total crypto market lost nearly $800 billion in value while liquidations exceeded $2.5 billion.Because excess leverage had already been cleared, the latest conflict did not trigger the same cascade of forced selling seen during earlier crises.
Analysts say this cleaner structure allowed prices to stabilize faster and helped investors treat digital assets as a macro hedge rather than a speculative trade.
Options expiry and fed decision remain key risks
The derivatives market traders are currently targeting high call option in the market at the price of $74,000 and $75,000 at the March 27 expiry.
Such high trading around those levels would indicate that there are numerous investors who believe the levels would go up further yet the levels would also make the markets to be volatile as expiration approaches.
The other significant event is the Federal Reserve meeting that will take place in March 17 and 18 that might have an impact on all risk assets in case the makers of the policy take a more stringent approach.
The relationship between the crypto and the S&P 500 has been strong at 0.78 indicating that the effect of tightening the monetary policy might rapidly decelerate the ongoing boom.
In case of the Fed signalling an increased energy prices due to the conflict, markets are likely to respond negatively particularly when interest rate reduction is postponed.
Nonetheless, the neutral or favorable attitude may influence the buyers to drive prices upward, especially in case the geopolitical tensions remain reduced.
