JPMorgan says the Iran war has caused an unusual market split. Bitcoin is showing signs of demand for safe-haven assets, while traditional geopolitical hedges gold and silver are falling under pressure from capital outflows, profit taking and worsening liquidity.
Nikolaos Panigirtzoglou and his team said in a report dated March 26 that bitcoin has held up better than precious metals since the conflict escalated. Gold ETFs recorded nearly $11 billion in outflows in the first three weeks of March, while gold is down about 15% this month, the bank said. JPMorgan is also putting pressure on silver, saying the ETF inflows that had built up since last summer have unraveled, even as Bitcoin funds continued to see net inflows during the same period.
Bitcoin shows safe haven demand
This discrepancy is not just about price. JP Morgan argues that this is also reflected in its positioning and market structure. Gold and silver were in a very crowded trade after gold rose to nearly $5,500 an ounce and silver near $120 an ounce earlier this year.
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Those positions began to unwind as interest rates rose, the dollar strengthened, and investors became risk-averse. CME-based positioning shows that gold and silver exposures have declined sharply since January, while Bitcoin futures holdings have remained relatively stable in recent weeks.
The bank's explanation is more nuanced than a simple “Bitcoin replaced gold” story. Bitcoin was initially sold off along with other risk assets when the war broke out, briefly dropping to the low $60,000 range, but then stabilizing in the high $60,000 to low $70,000 range. JPMorgan's argument is that Bitcoin did not behave like a classic haven during the initial stages of the shock, but recovered as flows returned while gold and silver continued to lose support.
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JPMorgan also linked its relative resilience to the utility of cryptocurrencies in stressed jurisdictions. “Due to the deterioration of gold's liquidity situation, the market width of gold is currently below the width of Bitcoin,” the bank wrote.
In a separate summary of the report, JPMorgan said: “The surge in crypto activity in Iran highlights the role of cryptocurrencies as safe-haven assets in countries experiencing economic and monetary instability and geopolitical stress.” The bank cited Chainalysis data showing an increase in Iranian cryptocurrency activity since the outbreak of war, including transfers from domestic exchanges to self-custodial wallets and international platforms.
A combination of borderless payments, self-custody and 24-hour transactions is at the heart of the bank's argument. JPMorgan said that Bitcoin's momentum indicator, which had been in oversold territory, is now returning to a neutral direction, suggesting selling pressure may be easing.
In contrast, gold and silver momentum swung from overbought to below neutral as liquidations accelerated. The bank's liquidity measures show a similar story. Gold's market breadth is currently lower than Bitcoin's, but the thin market breadth of silver is making the decline even steeper.
At the time of writing, BTC was trading at $68,597.
Featured image created with DALL.E, chart on TradingView.com
