After an initial slide triggered by US attacks on three nuclear enrichment sites in Iran – Fordow, Natanz and Isfahan – bitcoin hit a low US$98,635.23 on Sunday afternoon, before quickly recovering to US$101,862 by Monday 4.30pm (AEDT).
Speaking to InvestorDaily, Jonathan de Wet, chief investment officer at digital asset trading firm Zerocap, said bitcoin’s rally is part of a broader shift in investor appetite.
Pointing to past patterns, de Wet noted a similar rally occurred after the US assassination of Iranian commander Qassem Soleimani in 2020 – when bitcoin rose nearly 5 per cent overnight – but this time, bitcoin has additional factors working in its favour.
“There has been an increasing market appetite towards bearer assets since Trump formed the new presidency, such as gold and bitcoin, a result of uncertainty around American exceptionalism under his leadership,” he said.
“The 30-Year US Treasury yields are sitting at close to 5 per cent due to risk premium pricing, which has benefited bitcoin over the past six months.”
Despite bitcoin’s drop in the immediate aftermath of President Trump’s engagement in Iran – described by de Wet as a “typical use of crypto as a risk asset due to other markets being closed” – the asset quickly regained buoyancy with the Monday Asian session’s open, underscoring its evolving role within the US market context.
He, however, flagged further volatility ahead, depending on developments in the Strait of Hormuz – through which around 20 per cent of the world’s oil supply flows, the equivalent of approximately 20 million barrels passing through the strait per day.
The Iranian Parliament announced on Monday it has voted to close the Strait of Hormuz in retaliation to the US’ involvement with the war, with the decision pending approval by the Islamic Republic’s Supreme National Security Council.
“This week will be the big test against shifting geopolitical risks. We expect BTCUSD to hold above US$100,000,” de Wet said.
Also speaking to InvestorDaily, Merkle Tree Capital co-founder and chief investment officer Ryan McMillin, said bitcoin’s “quick rebound or ‘V-shaped’ recovery” indicates strong support for the asset, as institutional buyers in the Asia time zone “bought up the dip below US$100,000 very quickly”.
“Historical geopolitical data shows that gold typically performs best immediately after a crisis, but BTC performs best in the following weeks and months,” McMillin said.
“The US dollar and treasuries were the primary risk off asset for the last 4–5 decades but increasing gold and now bitcoin are filling that role, the non-sovereign nature of these assets means they do not carry an inflation risk associated with a heavily indebted government.”
Weekend trading reveals evolving investor behaviour
McMillin added that trading over the weekend was driven by liquidity dynamics, with market makers potentially pushing bitcoin’s price down to US$98,000, enough to trigger liquidation of leveraged long positions, but not beyond that level.
“Weekend trading sees lower trading volumes, which give market makers more ability to influence price if and when an event occurs,” he said.
Trading activity during the dip and recovery phase highlighted shifting investor behaviour, with de Wet suggesting that potential early signals of market intelligence are at play.
“We did see initial selling prior to the attacks, which could suggest that insiders had information disseminated before the rest of the market,” de Wet said.
“The moves themselves have been very efficient, with limited liquidity gaps.”
Bitcoin straddling multiple roles in the market
According to de Wet, bitcoin’s identity is increasingly multifaceted, moving between safe-haven, bearer asset and risk asset depending on market conditions.
“We are seeing dynamic beta at play; BTC shifts between risk asset, bearer asset and safe-haven depending on the market flows and global context,” he said.
“With more liquidity in the market, we expect the asset to be used as a gold alternative when the market is bidding scarcity and self-custodial assets, and to be priced as a risk asset when other markets cannot provide liquidity, such as over the weekend.”
He added that Zerocap expects portfolio managers to take “greater interest, as the benefits of being uncorrelated with wider market movements are growing”.
McMillin added that bitcoin exhibits both risk-on and risk-off characteristics, combining scarcity similar to gold with adoption dynamics akin to tech stocks like those in the Nasdaq.
“As adoption continues, it will increasingly trade as a risk-off asset, but for now and the next few years, it will continue to oscillate between the two.
“This still makes it a great addition to a portfolio as it is ultimately uncorrelated over longer time frames and thus will enhance risk-adjusted returns,” McMillin said.
