(March 5): Bitcoin surged past US$73,000 as cryptocurrency markets built on recent resilience, drawing momentum from exchange-traded fund (ETF) inflows and rising open interest even as Wall Street steadied itself against an unresolved Middle East conflict.
The largest cryptocurrency rallied as much as 8% to surpass the US$73,000 mark, hitting its highest value in nearly a month. Ether also surged — up as much as 9% to more than US$2,100.
Stocks rose and oil steadied as signs the conflict in Iran may be shorter-lived than feared lifted sentiment. Bitcoin, which fell to around US$63,000 after Saturday’s US and Israeli strikes on Iran, has rebounded, with US spot bitcoin ETFs pulling in more than US$680 million over the past two days, according to data compiled by Bloomberg.
“There’s strong demand in the perpetual futures market after bitcoin’s price had been consolidating for the past month,” said Julio Moreno, head of research at CryptoQuant. “Open interest spiked as prices increase, indicating traders opened fresh long positions.”
Despite Wednesday’s rebound, crypto markets remain on edge, with bitcoin still about 40% below its October peak following a months-long selloff. That backdrop has put bitcoin in a unique position amid geopolitical turmoil, providing the basis for a rally while other asset classes may be due a breather.
See also: Bitcoin slides as risk of prolonged Iran war weighs on crypto
Crypto advocates have often compared the cryptocurrency to gold, viewing it as a digital version of the safe haven asset that investors might turn to in turbulent times. That narrative failed to stick as bitcoin fell in recent months while gold rallied. The token has since outperformed gold in recent days, bouncing about 10% since Friday before the Iranian conflict began. Gold is down around 2% over the same period.
“Capital may be rotating back into crypto as gold takes a back seat,” said Frank Chaparro, head of content and special projects at GSR. “Gold doubled while bitcoin was cut in half, and against a backdrop of geopolitical tensions, sanctions, war, money printing and widening budget deficits, bitcoin feels like it’s been left for dead relative to other assets. That kind of positioning can flip quickly when sentiment turns.”
Crypto’s volatility and the ongoing military action means that any rebound in digital assets could be short-lived. The expanding war moved into its fifth day on Wednesday, with Israel and Iran continuing to exchange airstrikes and missile fire. Hundreds of people have died in Iran and dozens elsewhere in the region, while the US says six of its servicemen have been killed.
See also: Bitcoin stages tepid recovery as Iran strikes stir uncertainty
“We still consider the situation too fragile to say that the bottom has been reached,” said Alex Kuptsikevich, chief market analyst at FxPro. “Bitcoin is vulnerable due to the increased volatility of stock indices, which is forcing institutional investors to reduce their leverage.”
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