JPMorgan: Bitcoin Outshines Gold and Silver Amidst Iran War

In the midst of the Iran war, JPMorgan has highlighted a significant shift in market dynamics: Bitcoin is emerging as a preferred safe-haven asset while traditional safe havens like gold and silver are experiencing declines.

Key Takeaways

Bitcoin is showing increased safe-haven demand amid geopolitical tensions, unlike gold and silver, which are underperforming.
Gold has dropped nearly 15% this month, largely due to significant outflows and profit-taking.
Bitcoin funds have continued to see net inflows, indicating ongoing investor interest.
The market positioning shows a stark contrast between Bitcoin and precious metals, with Bitcoin maintaining stability amid rising tensions.

JPMorgan Says Bitcoin Is Beating Gold And Silver During The Iran War

Bitcoin's Emerging Safe-Haven Status

According to a report dated March 26, analysts Nikolaos Panigirtzoglou and his team at JPMorgan noted that Bitcoin has performed better than gold and silver as the conflict in Iran has escalated. The report stated that gold prices have declined by about 15% this month, and gold exchange-traded funds (ETFs) have experienced nearly $11 billion in outflows during the first three weeks of March. Similarly, silver has faced pressure as inflows related to ETFs, which had built up since last summer, have now been reversed. In contrast, Bitcoin funds have continued to post net inflows during this challenging period.

Market Trends Favor Bitcoin

This divergence in performance is not merely a matter of price fluctuations; it reflects broader market positioning and structure. Gold and silver had become overcrowded trades earlier this year, with prices pushing gold close to $5,500 per ounce and silver approaching $120. However, as interest rates increased and the dollar strengthened, investors began to reevaluate their positions, leading to significant unwinding in gold and silver trades. According to CME data, there has been a considerable decrease in gold and silver exposure since January, while Bitcoin futures holdings have remained relatively stable.

JPMorgan pointed out that Bitcoin's initial response to the onset of the war mirrored that of other risk assets. It briefly dipped into the low-$60,000 range before stabilizing back in the high-$60,000 to low-$70,000 range. Unlike the classic safe-haven behavior, Bitcoin's recovery coincided with improving market flows, while gold and silver continued to struggle.

The bank further emphasized the unique advantages of cryptocurrencies, particularly during periods of economic and geopolitical stress. A summary from the same report noted, "The surge in Iran’s crypto activity highlights the role of cryptocurrencies as a safe haven asset in countries experiencing economic and monetary instability." Data from Chainalysis showed that crypto activity in Iran increased post-conflict, particularly transfers from local exchanges to self-custody wallets and international platforms.

Bitcoin’s attributes, such as borderless transactions, self-custody options, and 24/7 trading, are central to JPMorgan's analysis. The bank noted that Bitcoin's momentum indicators, which had previously been oversold, are beginning to trend back toward neutral, indicating a potential easing of selling pressure. In contrast, the momentum for gold and silver has significantly declined amid accelerating liquidations. JPMorgan's analysis of liquidity confirms that gold’s market breadth has diminished below that of Bitcoin.

As of the current report, Bitcoin is trading at $68,597.

Bitcoin price chart
Bitcoin must break above $74,500 according to the 1-week chart. Source: BTCUSDT on TradingView.com