For most of the week, crypto traders looked more positive than investors in other assets such as currencies and gold, which saw significant sell-offs as markets reopened after the US and Israeli strikes on Iran over the weekend.
On Thursday morning, European stocks gained and US stock futures were little changed after reports that Iran is ready to give up its uranium stockpile. “When you add this news to the market which was clearly a bit more bullish on risk-off and mitigation than we saw on Tuesday, you have a strong enough combination to drive significant volatility across the board,” Michael Brown, senior research strategist at Pepperstone Ltd, wrote in a note on Thursday on broader macro moves.“In fact, when emotions have gone to such extremes, it doesn’t take a particularly significant or concrete catalyst to turn things into a resolution,” he added.
Bitcoin has fallen about 40% since peaking above $126,000 in early October, hurt by geopolitical uncertainty and a lack of clarity about US plans for new crypto legislation. According to data from CoinGecko, the total market value of all cryptocurrencies in circulation since then has cleared more than $1.8 trillion.
Still, there appear to be some bright spots for the asset class. After months of outflows, exchange-traded funds tracking bitcoin in the U.S. have recorded more than $1.1 billion in outflows so far in March, including $462 million on Wednesday, according to data compiled by Bloomberg. The inflow or outflow of these products is seen as a key barometer of confidence in the market. “Motivation is once again changing rapidly in the crypto world,” said Caroline Morone, co-founder of Orbit Markets.
In recent days, Bitcoin has outperformed gold, which the digital asset is often compared to but rarely equals. Since Friday, the day before the strikes, gold has fallen nearly 2%, while Bitcoin is up more than 10% over the same period. Until this week, the trend in recent months was largely reversed, as bullion repeatedly reached record prices while Bitcoin fell.
BloombergOutside of Bitcoin, other digital assets have shown “relative resilience” given the geopolitical turmoil, according to crypto analyst Sylvain Olive. A measure called Total 3, which represents the total market value of all altcoins excluding Ether, has increased nearly 12% since the beginning of February, Olive wrote in a note for CryptoQuant on Thursday.
“This development remains significant given the still fragile global environment,” Zeitun wrote. “In such uncertain circumstances, it is necessary to select positions carefully, relying on market signals that are beginning to emerge.”
