When missiles began flying over the Gulf in late February 2026, the world’s financial markets braced for the familiar script: investors fleeing to gold, the US dollar strengthening, and risk assets collapsing. Bitcoin was supposed to follow the risk-asset playbook and tumble. It did not.
Instead, the world’s leading cryptocurrency quietly staged one of its more surprising performances in recent memory, forcing a serious reconsideration of where Bitcoin stands in the global financial order.
From Shock to Surge
When an Israeli strike on Iran spiralled into the broadest Middle Eastern military conflict in decades, Bitcoin initially held above $63,000, a level that looked fragile at the time. Then something unexpected happened.
Bitcoin dropped to $63,106 on February 28, just before the conflict fully ignited, before bouncing back to $73,156 by March 5 and continuing to climb. By mid-March, Bitcoin had risen roughly 7% since the escalation began, outperforming the S&P 500, the Nasdaq 100, gold, and silver, while holding steady near $70,000 even as Brent crude briefly pushed back toward $100 per barrel. The asset advanced to nearly a six-week high as investors returned on optimism that market turmoil tied to the conflict may be starting to ease.
Gold Retreats, Bitcoin Advances
The more striking story is what happened to gold. Traditionally, war sends investors stampeding into bullion. That reflex played out initially, physical gold briefly surged past $5,500 per ounce earlier this year, but retreated to around $4,988 per ounce by mid-March.
The reason behind the pullback matters. The prospect of higher-for-longer interest rates bolstered the US Dollar Index, and a stronger dollar makes dollar-denominated assets like gold significantly more expensive for international buyers, effectively capping the precious metal’s upside despite the ongoing conflict.
Bitcoin, which carries no such currency burden, has been the quiet beneficiary. Its rapid transferability and limited regulatory control have made it attractive to a growing segment of investors, particularly in environments involving capital controls and uncertainty.
The Safe Haven Debate
Not everyone is convinced this rally means Bitcoin has matured into a reliable store of value. The debate among analysts is sharp and unresolved.
Bitcoin’s behaviour during the early stages of the conflict was not characteristic of a conventional safe-haven asset, with shifts in investor sentiment, risk appetite, and liquidity trends in other markets heavily influencing its fluctuations. Critics point out that the asset remains deeply volatile, having traded in a rough range of $60,000 to $75,000 since early February.
Sentiment remains weak, with Bitcoin funding rates negative since early March and the crypto fear and greed index deep in extreme fear territory, highlighting a disconnect between market positioning and price resilience. In other words, Bitcoin is rising even as most traders are too nervous to confidently back the move.
What Comes Next
The Federal Reserve sits at the centre of Bitcoin’s short-term outlook. Fed Chair Jerome Powell faces the difficult task of navigating the economic fog of war. If the Fed adopts a hawkish tone in response to surging oil prices, the resulting liquidity squeeze could test Bitcoin’s current support zones.
There is also a regional dimension emerging. At the on-chain level, stablecoins have become the functional currency for countries grappling with war, sanctions, and economic collapse — with significant inflows recorded in Lebanon and Turkey as crypto steps in where traditional financial systems have broken down.
Bitcoin is still far from being a consistently secure asset, but it keeps evolving into a hybrid instrument on the global financial scene. It is part speculative bet, part geopolitical hedge, and increasingly, something that investors in unstable regions are treating as a lifeline rather than a lottery ticket.
